Critical Analysis: Electrameccanica Vehicles (NASDAQ:SOLO) & Nikola (NASDAQ:NKLA)

Electrameccanica Vehicles (NASDAQ:SOLO) and Nikola (NASDAQ:NKLA) are both auto/tires/trucks companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Insider and Institutional Ownership

21.5% of Electrameccanica Vehicles shares are owned by institutional investors. Comparatively, 50.2% of Nikola shares are owned by institutional investors. 22.8% of Nikola shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Electrameccanica Vehicles and Nikola’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Electrameccanica Vehicles $570,000.00 634.33 -$63.05 million ($0.85) -3.76
Nikola $90,000.00 47,896.33 -$384.31 million ($1.73) -6.16

Electrameccanica Vehicles has higher revenue and earnings than Nikola. Nikola is trading at a lower price-to-earnings ratio than Electrameccanica Vehicles, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations for Electrameccanica Vehicles and Nikola, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Electrameccanica Vehicles 0 0 3 0 3.00
Nikola 0 8 1 0 2.11

Electrameccanica Vehicles currently has a consensus target price of $8.00, indicating a potential upside of 150.00%. Nikola has a consensus target price of $15.38, indicating a potential upside of 44.23%. Given Electrameccanica Vehicles’ stronger consensus rating and higher possible upside, equities analysts clearly believe Electrameccanica Vehicles is more favorable than Nikola.

Profitability

This table compares Electrameccanica Vehicles and Nikola’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Electrameccanica Vehicles -7,990.56% -21.20% -19.78%
Nikola N/A -78.57% -67.43%

Risk and Volatility

Electrameccanica Vehicles has a beta of 2.58, indicating that its stock price is 158% more volatile than the S&P 500. Comparatively, Nikola has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Summary

Electrameccanica Vehicles beats Nikola on 10 of the 14 factors compared between the two stocks.

Electrameccanica Vehicles Company Profile

Electrameccanica Vehicles Corp. engages in development and manufacture of electric vehicles. It operates through Electric Vehicles and Custom Build Vehicles segments. The Electric Vehicles segment develops and manufactures electric vehicles for mass markets. The Custom Build Vehicles segment offers high-end custom built vehicles. The company was founded by Jerry Kroll and Henry R. Reisner on February 16, 2015 and is headquartered in Vancouver, Canada.

Nikola Company Profile

Nikola Corp. engages in the provision of zero-emissions transportation and infrastructure solutions. It designs and manufactures battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems and hydrogen fueling station infrastructure. The company was founded by Trevor Milton in 2015 and is headquartered in Phoenix, AZ.

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