US EV startups are expected to report another quarter of dwindling cash reserves next week, piling pressure on a group of companies that are struggling to ramp up production and have few funding options in a turbulent economy.
Having gone public with the hopes of shaking up the auto industry, these companies have seen their market valuations evaporate in recent months as demand for EVs slows and the market leader Tesla Inc cuts prices to replenish orders.
Polished The group kicks off first-quarter earnings for the group on Monday, with the company expected to report a 36% sequential drop in cash reserves, according to Visible Alpha.
They revive The auto sector, meanwhile, is likely to report on Tuesday that its cash balance fell 6.8% to $10.78 billion from the previous quarter, according to an estimate from Visible Alpha.
The Amazon.com Inc-backed company, whose shares fell by nearly a quarter this year, is also expected to report a larger $1.75 billion loss as both deliveries and production fell over the period. . It posted a loss of $1.59 billion a year ago.
fisker Inc and Nikola, both reporting earnings on Tuesday, are expected to see their cash reserves fall 5% and 15%, respectively, according to Visible Alpha.
“Any company that is losing money on a low valuation is toast and electric vehicles are no exception. I think it’s just a slow bleeder. Maybe they’ll get lucky and some of their technology could be bought by bigger players,” said Thomas Hayes , chairman of hedge fund Great Hill Capital.
A decline in company valuations has made selling shares for hard cash more ineffective, and investors are growing increasingly unhappy with the dilution of their stake as several startups have yet to recognize revenue from operations.
British EV startup Arrival SA and Nikola have issued going-concern notices in recent months, with the former set to merge with blank check firm Kensington Capital Acquisition Corp in a bid to raise cash.
Lordtown Motors said this week it may be forced to file for bankruptcy due to uncertainty over a financing deal with major shareholder Foxconn. Its earnings in an unscheduled release Thursday showed Lordstown’s cash balance fell 11% on a rolling basis.
Some of the companies, including Lucid and Rivian, have also said they will not disclose data on booking numbers in the future, causing some concern among investors.
It’s a “disturbing development,” said CFRA Research analyst Garrett Nelson. “What we’ve seen is a trend towards less transparency in booking counts, but overall competition is a big problem,” he added.
—————————————————-
Source link