Robinhood Phenomenon Is Fueling An Electric Vehicle Boom

Robinhood Phenomenon Is Fueling An Electric Vehicle Boom

In the past, Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk never hesitated to call it as it was whenever TSLA stock started overheating. But maybe he’s finally beginning to buy the Tesla hype. Lately, all he could muster was a “wow” after another Wall Street pundit joined the ranks of investors who cannot seem to get enough of the EV maker. Tesla and the EV sector have been running riot in recent weeks thanks to a wave of speculative bets and the famous Robinhood effect

Tesla and leading Chinese EV manufacturer, NIO Inc. (NYSE:NIO) have become Robinhood’s most coveted stocks, with the two commanding the highest number of new owners over the past 30 days on the zero-commission trading app.

Currently, 4 EV names appear on Robintrack’s top 25 leaderboard, with Nikola (NYSE:NKLA) and Workhorse (NASDAQ: WKHS) being the other two. Robintrack is a company that collects data on Robinhood users’ activity.

The huge runups by companies in the space – a majority with little to show in the way of real products or profits – could be a textbook case of irrational exuberance and the ESG craze gone too far.

Speculative Bets

Whereas there’s no denying that the EV sector appears to have a bright future (mostly), there’s growing evidence that the participation of hordes of retail and amateur traders in the stock markets with no clear understanding of the underlying risks could be fueling the swelling bubble.

Take the case of the sector leader, Tesla, whose shares have gained 252 percent in the year-to-date and confirmed its billing as a true cult stock

The huge runup means that the EV maker is now worth more than General Motors (NYSE: GM), Ford Motor Company (NYSE: F), Fiat Chrysler Automobiles US (NYSE: FCAU), BMW (OTCMKTS: BAMXF), Daimler (OTCMKTS: DDAIF), and Volkswagen (OTCMKTS:VLKAF) combined. Never mind the fact that the U.S. ‘Big 3’ of General Motors, Ford, and Fiat Chrysler sold 1.29 million vehicles last quarter compared to Tesla’s 90,650, or a ratio of 14.3:1. 

Tesla’s current share price of $1,486 is quite hard to wrap your head around. According to Morgan Stanley, a $1,000 share price implies investors expect the company to sell ~4 million/year by the turn of the decade, or about 8x its current production clip of 500k/year. TSLA is now flirting with $1,500.

Source / More information : By Alex Kimani

Report by: OGP/Segun Cole , Please email us your industry related news for publication
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