Several fundamentally weak electric vehicle (EV) stocks whose prices have gained significantly based solely on investor optimism about the industry’s growth prospects could experience a price downtrend in the near term. EV stocks Arcimoto (NASDAQ:FUV) and Beam (BEEM) possess high short interest, which indicates bearish sentiment toward them. Let’s take a closer look.Even though a global semiconductor shortage continues to negatively impact electric vehicle (EV) production, the industry is expected to grow significantly in the long run based on supportive government policies and regulations amid rising automobile emission concerns. According to a SpendEdge report, the EV market is expected to grow at a 20.4% CAGR between 2021 - 2025.
However, the industry is crowded, with several fundamentally weak new entrants vying for market share. And shares of many of these companies have advanced based solely on investor optimism about the industry’s growth prospects. Because many of these stocks possess high short interest, the latest social media triggered short squeezes have also driven a rally by some of them.
Shares of fundamentally weak EV companies Arcimoto, Inc. (FUV) and Beam Global (BEEM) have a high percentage of short float, representing bearish investor sentiment. So, we think it is wise to avoid these two stocks now.