Short Selling

Short Sellers Are Targeting These EV Stocks As We Start 2023

2022 was an ugly year for electric vehicle (EV) stocks. Going into 2022, there was a lot of enthusiasm for these stocks within the retail investor community. As a result, many had elevated valuations. As interest rates rose last year, however, their valuations became an issue, and share prices across the industry fell sharply. Rivian, for example, saw its share price decline from above $100 to below $20 over the course of the year. 

Will 2023 be a better year for EV stocks? It could be. After all, many of these stocks are down 80% or more from their highs. Having said that, there are a number of EV stocks that hedge funds are still shorting aggressively as we start the new year. Here’s a look at five electric vehicle companies with high short interest at the start of 2023. 

Lucid Group Inc

Let’s start with Lucid Group Inc (LCID:US). It’s a manufacturer of high-spec, premium electric vehicles. Founded in 2007, it produced its first EVs in 2021. 

Our data shows that at present, around 233 million Lucid shares are on loan, representing about 39.6% of the free float. Utilization – a measure of demand from short sellers – is 100% while the cost to borrow stock is 10.98%.

Lucid stock fell from $38 to $7 last year. And the short sellers capitalized as they were shorting the stock all year. The high level of short interest here currently indicates that they see further downside, however. 

Operational setbacks, rising costs, cash flow burn, canceled orders, and a relatively high valuation are likely to be some of the reasons hedge funds continue to short the stock today.

Fisker 

Next up is Fisker (FSR:US). It’s an EV company that is based in California. Its flagship model is the ‘Ocean’, an all-electric SUV designed to go head-to-head with Tesla’s Model Y.

Our data shows that there are 88.94 million Fisker shares on loan right now. That equates to short interest of a high 56.2%. Utilization is 100% while the cost to borrow stock is 24.9%. Clearly, hedge funds are bearish on the stock. 

One thing the short sellers may be focusing on here is the company’s losses. For Q3, the company posted a loss of $149 million compared to $109 million a year earlier. 

It’s worth noting that in early December, Fisker was the subject of a report from short seller Fuzzy Panda Research. Fuzzy Panda believes Fisker will need to raise “significantly more cash” in the coming quarters to fund its increases losses. 

Mullen Automotive 

Mullen Automotive (MULN:US) is another EV company that the hedge funds are targeting right now. It owns and partners with several synergistic businesses that are all working towards the same goal of creating clean and scalable electric vehicles and energy solutions. 

At present, 322.9 million Mullen shares are on loan, representing 80% of the free float. Utilization is 100% while the cost to borrow is 67%. 

In April last year, Mullen Automotive was targeted by renowned short seller Hindenburg Research. Since then, the stock has fallen nearly 92.8%. However, the high level of short interest here suggests that short sellers see further downside ahead. 

Lordstown Motors 

Lordstown Motors (RIDE:US) is also being targeted by short sellers as we start 2023. It’s an automotive company that has developed an all-electric pickup truck. 

Currently, 59.18 million Lordstown shares are on loan, representing approximately 33.7% of the free float. Utilization is 100% while the cost to borrow is 5.6%. 

Short sellers have had a lot of success with this EV stock in the past. In an article posted in June 2021, we noted that they were aggressively targeting the stock. Since then, it has fallen from around $11 to near $1. 

It seems that the short sellers see further downside ahead though. This is despite the fact that the company announced late last year that an initial batch of 500 vehicles were ready for delivery. 

Faraday Future Intelligent Electric 

Finally, we have Faraday Future Intelligent Electric Inc (FFIE:US), a mobility company that is based in California. Established in 2014, it’s focused on developing and creating a mobility ecosystem that integrates clean energy, artificial intelligence (AI), and the Internet. Its flagship product is the FF 91, an all-electric, autonomous-ready vehicle. 

Our data shows that at present, 115.01 million FFIE shares are on loan, representing 48.8% of the free float. Utilization is 100% while the cost to borrow stock is 8.3%. These figures indicate that hedge funds are very bearish on the stock. 

It’s worth noting that short interest here has spiked recently. Since the end of November, the number of shares on loan has risen by around 70%. This tells us that short sellers have been ramping up their downside bets. 

This spike in short interest could be related to the fact that late last year, the company said that there was “substantial doubt” over its ability to continue as a going concern and that it would need to raise funds to continue to run its operations. 

Short Sellers Do Their Research 

Now, short sellers are not always right. Sometimes, heavily-shorted stocks go on to produce strong gains to the upside. 

However, short sellers do tend to do their research. And if they are shorting a stock, there’s usually a very good reason they are doing so. 

Therefore, we think caution is warranted towards these five EV stocks in the near term. 

Want to delve deeper? Contact us today to find out more about 2iQ’s data and analytics offering, including our comprehensive short squeeze model.

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