Despite gaining traction, the electric vehicle (EV) industry’s growth hinges on sufficient deployment of charging stations and continued gains in efficiency. The industry is still hampered by a semiconductor shortage, which is expected to last until next year. Hence, fundamentally weak EV stocks popular on Reddit such as Tesla, Inc. (NASDAQ:TSLA) and Canoo Inc. (GOEV) are best avoided now.The Reddit community came into the limelight earlier this year, following the GameStop (NYSE:GME) short-squeeze in January. However, this squeeze was short-lived owing to GME’s weak fundamentals. The community is also taking an active interest in the growing electric vehicle (EV) industry.
Supported by federal funding, the EV market is expanding rapidly. However, according to the experts, in the United States, charging facilities are five to 10 times lower than they should be to fulfill Biden’s plan of “50% cars sold to be EVs by 2030.” It requires far more than the $7.5 billion allocated in the infrastructure bill to reach the goal. Additionally, the industry is still grappling with the semiconductor shortage. Since semiconductor is a key component in EV production, the deficit has been affecting the production targets of several companies. Marvell (NASDAQ:MRVL) Technology Group Ltd. (MRVL) CEO Matt Murphy expects the semiconductor shortage to continue into 2022 and can potentially extend beyond that.
Tesla, Inc. (TSLA) and Canoo Inc. (GOEV), which are popular on Reddit, look highly overvalued at their current price levels. So, these stocks are best avoided now.