Electric-vehicle startups set to extend blistering rally (updated)

Nu Ride

16/06/2023 14:21

(Adds graphics, trader comments in paragraphs 5-6, options data
in paragraph 13; updates short interest data in paragraph 3)
    By Aditya Soni and Akash Sriram
       June 16 (Reuters) - Electric-vehicle startups from
Nikola  NKLA.O  to Lordstown Motors  RIDE.O  were on Friday set
to extend a searing rally in their shares that has put them on
track for hefty weekly gains.
    The winning streak has come without any apparent news or
catalyst for the companies, leading several analysts and traders
to point to a potential squeeze in the highly shorted stocks.
    For instance Nikola, whose value has more than doubled this
week, has a short interest of 21.7%, according to S3 Partners.
Other big gainers such as Lordstown and Workhorse Group  WKHS.O 
have short interests of 16.5% and 23.9%, respectively.
    
    
    Used-car retailer Carvana  CVNA.N , another highly shorted
stock, has also posted strong gains that have pushed up its
value by nearly $1.38 billion this week.
    "We see this every time the market gets hot," Dennis Dick, a
trader at Triple D trading, said.
    "Carvana probably kick-started this, it is up more than 100%
in a couple of weeks on a short squeeze. Smaller names with high
short interest are following suit now."
    The rally has added more than $500 million to the collective
market value of the EV startups and coincided with a record
winning streak at market leader Tesla  TSLA.O , whose stock
movement often influences other companies in the sector.
     
    
    RETAIL INTEREST
    Retail investors have also ploughed into EV shares, with the
J.P. Morgan retail flows tracker showing Nikola was the fifth
most traded U.S. stock by such traders on Thursday.
    Nikola and Lordstown have drawn a flurry of bullish options
activity in recent days as traders place bets on further gains.
    On Thursday, more than half a million options contracts on
Nikola changed hands making the relatively small company the
eighth most active single stock name in the options market,
according to Trade Alert data.
    The stock surge could help Nikola overcome the risk of being
delisted after it received a warning late in May from Nasdaq
that its share price had been below the $1 minimum level.
    Nikola shares were 20% higher before the bell on Friday at
$1.65, on course to stay above the minimum level for the third
straight session. The stock will regain compliance with Nasdaq's
norms if it trades above $1 for 10 consecutive days.
    Workhorse and Lordstown rose 8.3% and 7.4%, respectively,
while Carvana was slightly up as it eyed weekly gains of 38%.
    Nikola's stock has a 12-month forward price-to-sales ratio
of 3.21, compared with Workhorse's 1.38 and Tesla's 7.23,
according to Refinitiv data.
    Still, many challenges remain for the EV startups.
    Rising interest rates and high inflation have limited their
access to funding at a time when efforts to ramp up production
are already thinning the companies' cash reserves.
    

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Startups face uphill battle in EV race with Tesla    https://tmsnrt.rs/42Ksy3K
Carvana is among the most shorted stocks    https://tmsnrt.rs/43ZZ17q
Small-cap EV stocks' June jump    https://tmsnrt.rs/42Zkgpb
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 (Reporting by Aditya Soni and Akash Sriram in Bengaluru;
Additional reporting by Saqib Iqbal Ahmed in New York; Editing
by Shounak Dasgupta)
 ((Aditya.Soni@thomsonreuters.com; +91 80 6749 1130))