What happened
Shares of electric-vehicle and related companies were selling off on Thursday afternoon, a day after an investment-management company that has been a prominent investor in Tesla (TSLA -0.05%) said that it had reduced its stake in the Silicon Valley electric-vehicle (EV) maker.
Here's where things stood for the group as of 1:15 p.m. EDT on Thursday, relative to their closing prices on Wednesday.
- Graf Industrial (GRAF), the special-purpose acquisition company (SPAC) set to merge with lidar maker Velodyne Lidar, was down 8.4%.
- Hennessy Capital Acquisition IV (HCAC.U), the special purpose acquisition company (SPAC) planning to merge with California EV start-up Canoo, was down 2.5%.
- Li Auto (LI -4.10%), the newly-public maker of electric SUVs in China, was down 6.1%.
- Nikola (NKLA -3.28%), the Arizona-based electric-semi start-up, was down 7.1%.
- NIO (NIO -3.47%), the Chinese EV maker, was down 5.5%.
- Spartan Energy Acquisition (SPAQ), the SPAC planning to merge with U.S. EV start-up Fisker, was down 6%.
- Tortoise Acquisition (SHLL), the SPAC that will soon merge with hybrid-truck drivetrain maker Hyliion, was down 10.7%
- Workhorse Group (WKHS -0.13%), the Ohio-based maker of electric delivery vans, was down 5.9%.
- Xpeng (XPEV 0.66%), the most recent Chinese EV maker to go public in the U.S., was down 3.7%.
Tesla was down 7.6% at that hour as well.
DiamondPeak Holdings (DPHC), the SPAC planning to merge with Ohio electric-pickup start-up Lordstown Motors, was the outlier in the group: Its shares were down just 0.8% at 1:15 p.m. EDT today.
A post-split sell-off of Tesla put other EV stocks under pressure on Thursday. Image source: The Motley Fool.
So what
The story here is simple. These stocks, and many others, were caught in a broad-based sell-off of technology stocks on Thursday.
A seasoned investor might argue that we were overdue for a day like this, given the spectacular gains posted in 2020 by Tesla, NIO, and Workhorse, the three stocks in this group that were public at the beginning of the year.
All of the stocks in the group have benefited from the huge rally that began with Tesla late last year. In fact, it's fair to say that the newly public members of the group went public in part to take advantage of auto investors' intense interest in stocks related to EVs.
(Side note: Technically speaking, Graf Industrial, which will soon merge with Velodyne Lidar, isn't an electric-vehicle stock. But Velodyne's lidar sensors are used by just about every company and group working to develop self-driving technology, a market segment closely intertwined with EV development. Given that, it's not surprising that Graf's shares tend to move with this group more often than not.)
NIO just completed a $1.7 billion raise and had a great sales result in August, but its shares were down on Thursday anyway. Image source: NIO.
Now what
Investors who are concerned about today's sell-off should note that some of these companies' stocks were falling on Thursday even though they had reported bullish news this week.
- Li Auto reported a strong deliveries total for August, as did NIO earlier today.
- NIO completed its $1.7 million secondary stock offering on Wednesday.
- Workhorse announced a new strategic alliance with tech giant Hitachi.
- Graf announced that Velodyne had won 2 new long-term clients and raised its revenue guidance.
- New Securities and Exchange Commission filings confirmed that Tortoise Acquisition's merger with Hyliion is on track to close by the end of the month.
And last but not least, Tesla announced a $5 billion stock sale to pad its balance sheet — a move that makes the Tesla-bankruptcy thesis favored by short-sellers highly unlikely to happen any time soon.
Long story short: EV stocks have had a tremendous run, and a correction shouldn't come as a surprise. But auto investors should keep in mind that nothing about the fundamentals of any of these companies has changed for the worse in the last few days. If you bought to hold for the long term, this market storm is no reason to sell.
