Why QuantumScape and Other EV Stocks Are Dropping This Week
A wave of anxiety and volatility has hit the stock market this week amid uncertainty related to the omicron COVID-19 variant, the economic recovery, and the possibility that the Federal Reserve will start boosting benchmark interest rates in an effort to combat inflation. Growth-focused investors typically get hit hard in sell-offs, as speculative stocks lead the declines. That pattern held this week as many businesses in and related to the electric vehicle (EV) industry took outsized declines. Among them were solid-state battery company QuantumScape (NYSE: QS), EV charging network operator EVgo (NASDAQ: EVGO), and start-up EV maker Arrival (NASDAQ: ARVL). As of midday Friday, these stocks had declined as follows from last week's closing prices:
Demand for electric vehicles is still expected to soar in the coming years and decades, but these stocks are valued speculatively, based on expected future business results. And for now, the prospect of persistent inflation creates more uncertainty for this type of stock, as it requires investors to revalue those hoped-for future profits. But the prospects for these businesses still should be evaluated individually.
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Source Fool.com
