Welcome to The Fly's latest edition of "Charged," where we look back at some recent analysts' notes, news and activity in the electric vehicle and clean energy space.
RIVIAN SOARS IN MEGA IPO: Shares of Rivian, the electric truck maker backed by Amazon (AMZN) and Ford (F), soared in their trading debut last week, making it the second-most valuable carmaker in the U.S. behind Tesla (TSLA), but ahead of General Motors (GM) and Ford.
TESLA STOCK SALE: According to regulatory filings, Tesla CEO Elon Musk sold 934,091 common shares of the company on November 8. The prices in each transaction ranged from $1,135.05 per share to 1,196,236 per share. On Friday, Tesla CEO Elon Musk disclosed the sale of an additional 639,737 shares of the automaker for about $687M. This brings the total Tesla stock sales by Musk this week to about $5.7B. Tesla in morning trading is down $18.24 to $1,045.27. This comes after Twitter users overwhelmingly voted in favor of Tesla CEO Elon Musk selling 10% of his shares in the electric car maker. Musk said he would follow the poll's results as he posted it.
Meanwhile, responding to Senator Bernie Sanders' tweet saying "We must demand that the extremely wealthy pay their fair share. Period," Tesla's Elon Musk said over the weekend that, "I keep forgetting that you're still alive... Want me to sell more stock, Bernie? Just say the word..."
EV MAKER TARGETS RAISED: On Wednesday, Bank of America analyst John Murphy raised the firm's price targets on Tesla and Fisker (FSR) to $1,200 and $24, from $1,000 and $18, respectively, while keeping Neutral ratings on the shares. The analyst also upped Lucid Group's (LCID) price target to $60 from $30, maintaining a Buy rating on the shares. Murphy argued that the "notable valuation discrepancy" between the electric vehicle automakers in his coverage reflects his assessment of each company's ability to raise low-cost capital, with Tesla and Lucid Group viewed as "very likely," Fisker viewed as "somewhat likely," and Canoo (GOEV) and Lordstown Motors (RIDE) seen as "much less likely" in terms of that potential.
LUCID'S CAR OF THE YEAR: The Lucid Air sedan has been named the 2022 MotorTrend Car of the Year. In its report, MotorTrend says: "Its level of innovation and sophistication are as fresh and unexpected as multicolored tree bark... Were we wowed by the whopping numbers Lucid has been touting recently-up to 1,111 horsepower and 1,390 lb-ft of torque in the Air Dream P edition and up to 520 miles of EPA-official range in the Dream R edition? No. Anyone can buy big numbers by installing giant motors and batteries. Rather, it's the sophisticated way Lucid achieves them in a package that ranks highly in each of our six key criteria that captured our attention and our calipers."
'RIGHT TIME, RIGHT PRODUCT': Credit Suisse analyst Dan Levy initiated coverage of Fisker with an Outperform rating and $32 price target in a research note titled "Right Time, Right Product, Right Path." With electric vehicle uptake "sharply inflecting" and the market lacking sufficient model options, Fisker offers a compelling value proposition with a sleek product at a high-volume price point, Levy told investors in a research note. The analyst believes the company is "leveraging a de-risked business strategy" and can accelerate development speed and path to scaled production while also unlocking lower price points.
LORDSTOWN, FOXCONN PARTNERSHIP: Lordstown Motors and Hon Hai (HNHPF) have announced that they have entered into a definitive Asset Purchase Agreement regarding LMC's facility in Lordstown, Ohio. As previously disclosed, on September 30, Lordstown Motors entered into an Agreement in Principle, or AIP, with an affiliate of Hon Hai Precision Industries, also known as Foxconn, to work jointly on Lordstown Motors' electric vehicle programs in the production and assembly plant in Lordstown, Ohio. Shortly after the AIP, and as a sign of confidence in the partnership, Foxconn purchased $50M of common stock directly from Lordstown Motors at a price of $6.8983 per share. LMC has agreed to sell to Foxconn the Lordstown facility, excluding certain assets such as the hub motor assembly line and battery module and pack lines, for $230M; Foxconn has agreed to make a down payment of the purchase price of $100M by November 18, and subsequent down payments of $50M on each of February 1, 2022 and no later than April 15, 2022. The balance of the purchase price will be paid at closing; The parties have agreed to pursue a contract manufacturing agreement for the Endurance pickup truck, which must be entered into before closing-currently targeted by April 30, 2022; Lordstown Motors and Foxconn will pursue a joint venture agreement to co-design and develop vehicle programs for the global commercial fleet market, using the MIH open platform. Lordstown and Foxconn would have the right to commercialize these new EV programs in North America and internationally; Upon the closing, Foxconn will receive 1.7M warrants to acquire Lordstown common stock, exercisable for three years, at a price of $10.50 per share. The closing of the transactions contemplated by the APA is subject to closing conditions, including entry into the contract manufacturing agreement, regulatory approvals and other customary closing conditions.
MOVING TO THE SIDELINES: BTIG analyst Gregory Lewis downgraded Lordstown Motors to Neutral from Buy without a price target following the company's third quarter results. While the analyst continues to like the longer-term prospects for Lordstown's Endurance "to carve out a slice" of the commercial electric vehicle pickup truck market, with production being pushed back another few quarters he downgrades the shares. Endurance commercial deliveries are now expected to begin in the back half of 2022, Lewis told investors in a research note.
Meanwhile, R.F. Lafferty analyst Jamie Perez upgraded Lordstown Motors to Hold from Sell with a price target of $7, up from $3, to reflect what he now sees as the likelihood the Endurance EV will get to production under the company's new outsourcing model with Foxconn, or Hon Hai. Perez has reduced his 2022 revenue estimate to $263M from $525M to reflect the production delay from this year to next year, but now applies a higher price/sales multiple assumption to account for the sale of the Lordstown plant and entering into a contract manufacturing agreement with Foxconn.
Alongside its quarterly results, Lordstown said that, "Since the beginning of the fourth quarter, we have begun building the first of what we expect to be approximately 100 pre-production vehicles that we will use to pursue a variety of validation activities aimed at achieving full homologation. This is a modest delay from earlier expectations as component and material shortages, along with other supply chain challenges, remain an issue for Lordstown Motors just as they are for the industry at large. We now expect that commercial production and deliveries of the Endurance will begin in the third quarter of 2022."
CHINA Q4 OFF TO SOLID START FOR EVS: Morgan Stanley analyst Tim Hsiao highlighted in a research note last week that industry NEV sales continued set a new monthly record, with CAAM reporting official NEV wholesale sales of 383k units in October, up 135% year-over-year and up 7.2% month-over-month. In addition to strong sales of major local NEV players, like Xpeng (XPEV) and BYD (BYDDY), traditional OEMs were also selling well in October, the analyst added.
SOLAR TARIFFS: Solar stocks were in the spotlight on Thursday after U.S. trade officials rejected an effort by a group of domestic solar manufacturers to seek tariffs on panels imported from some South Asian nations, namely Malaysia, Thailand and Vietnam as the group believes Chinese companies have shifted production to those countries to avoid U.S. duties on solar cells and panels made in China. Commenting on the decision, Roth Capital analyst Philip Shen said it sees it as an incremental negative for First Solar (FSLR) and an incremental positive for nearly every other company in his universe that serves the U.S. His peer at Morgan Stanley also sees the news as a negative outcome for First Solar and Maxeon Solar (MAXN) since these tariffs could have raised prices "meaningfully" for their U.S. competitors.
BUSINESS MOMENTUM: Roth Capital analyst Craig Irwin upgraded Blink Charging (BLNK) to Buy from Neutral on November 12 with a price target of $45, up from $37, following the the third quarter results. Irwin believes Blink's improving business momentum is likely to accelerate in the second half of 2022 on greater availability to infrastructure subsidies. The team's long tenure in EV charging positions it well to benefit from a constructive environment, Irwin added.
On Monday, H.C. Wainwright analyst Sameer Joshi also upgraded Blink Charging to Buy from Neutral with a $50 price target. The analyst cited "several positive developments" for the upgrade, including a "significantly better" macro environment driven mainly by the approximately $7.5B allocated to electric vehicle charging network build-out in the U.S. as part of the infrastructure bill that has passed both houses of the U.S. Congress. In addition to supporting EV charging infrastructure, the administration aims to modify the existing $7,500 incentive per EV from a tax credit to a tax refund, and provide an additional benefit of $4,500 for EVs produced in U.S. factories with union labor, Joshi told investors in a research note. The analyst believes this should create additional demand for electric vehicles.
VALUATION 'DIFFICULT TO RATIONALIZE': Piper Sandler analyst Kashy Harrison initiated coverage of ChargePoint (CHPT) with a Neutral rating and $24 price target. The company is well positioned to benefit from the battery electric vehicle "revolution," said the analyst, who anticipates over 55% annual revenue growth through 2025. In addition, momentum from incoming federal policy support "could vault the stock higher nearer-term," Harrison told investors in a research note. With that said, the analyst feels ChargePoint's valuation is "difficult to rationalize," and as such, he looks for a pullback or indications of growth well above his expectations to revisit the Neutral rating.
Meanwhile, JPMorgan analyst Bill Peterson also started ChargePoint on Monday with a Neutral rating and $26 price target. While positive on ChargePoint's competitive position and growth the analyst believes the company's "strong position is priced into shares." Nonetheless, Peterson expects ChargePoint to drive "significant" sales growth over the next several years as electric vehicle adoption accelerates across its target markets.
More bullish on the name, Evercore ISI analyst James West initiated coverage of ChargePoint with an Outperform rating and $34 price target. The analyst believes ChargePoint is "viewed as an index for charging and investors look to it first for exposure to the sector" given its scale, global reach, and being the industry's "arms dealer." ChargePoint has differentiated scale as a first mover in EV charging and a strong market position with over 70% market share in U.S. Level 2 charging, West noted.
INFRASTRUCTURE BILL PRICED IN: Credit Suisse analyst Maheep Mandloi downgraded EVgo (EVGO) to Neutral from Outperform with a price target of $17, up from $11. The analyst cited valuation for the downgrade. The recent stock rally appears to have priced in the benefits of the infrastructure bill and expanded partnerships with GM and Uber (UBER), Mandloi told investors in a research note. EVgo has "first mover advantages," but also faces potential competition from new entrants in a technology agnostic capital intensive industry, the analyst contended.
ANALYSTS DIVERGE ON HYLIION: Cantor Fitzgerald analyst Andres Sheppard assumed coverage of Hyliion Holdings (HYLN) with an Overweight rating and $12 price target. Though Hyliion shares were weak given the third quarter update, Sheppard views this as a transitory issue which is unlikely to negatively impact its long-term monetization ability, which is a key driver of value, the analyst tells investors in a research note. The analyst continues to like Hyliion given its visible path to commercialization and its early-mover advantage.
Meanwhile, Barclays analyst Brian Johnson downgraded Hyliion Holdings to Equal Weight from Overweight with a price target of $7, down from $12. The analyst believes Hyliion has "compelling technology" but sees risk of a slower adoption curve for its powertrain design and "in more bearish scenario, a niche application." In addition to an elongated testing and trial period, increased competitive threats and supply chain issues leads to lower mid/long term growth forecasts, Johnson told investors in a research note. As such, he can longer able to justify a $2B valuation for Hyliion Holdings.
WEAKER RESULTS: Citi analyst Itay Michaeli downgraded Velodyne Lidar (VLDR) to Neutral from Buy with a price target of $8, down from $17. The analyst cited the "weaker" third quarter results and 2021 guide as well as a "material" cut to the company's estimated new business opportunity outlook for the downgrade. Though the CEO hire as a positive, the gross margin turnaround could take some time to play out, and the reduced new business outlook might also raise questions about Velodyne's market share and overall competitiveness, Michaeli tod investors in a research note. He thinks the stock could stay range-bound over the near-term until growth and margin visibility improves.
NVIDIA AUTONOMOUS VEHICLE PLATFORM: Shares of Luminar Technologies (LAZR) surged on Tuesday after the automotive lidar hardware and software technology company announced at the NVIDIA (NVDA) GTC conference that its lidar solution has been selected to be part of the sensor suite in the NVIDIA DRIVE Hyperion autonomous vehicle reference platform.