Stock Market Crash Warning: Don’t Get Caught Holding These 3 Flying Car Stocks
Flying car stocks may have great potential, but investors should be cautious. Despite the possibility of a stronger rally in the broader market indices leading up to June, the long-term prospects for these stocks remain uncertain. The momentum seen in the market may not necessarily translate into sustained growth for flying car companies in 2024 and beyond.
The companies mentioned in this article appear overvalued, as indicated by their high valuation ratios and questionable growth prospects. Investors should be wary of the hype surrounding these stocks and consider the challenges faced by the flying car industry, such as regulatory hurdles and technological limitations.
Let’s look at three flying car stocks that investors might want to consider selling. There are some flying car stocks for investors to be wary of, and this list contains three of the riskiest.
EHang (EH)
EHang (NASDAQ:EH) struggles with credibility issues and financial instability. Despite being among the most advanced in gaining regulatory approvals, the company has been plagued by allegations of fake revenue and misleading pre order figures. Its quarterly deliveries have dropped significantly, raising concerns about actual demand.
In 2013, the company reported an operating loss of $10.4 million and an adjusted net loss of $7.1 million for Q2 2023. EHang’s liquidity remains strained, relying heavily on equity financing to meet operational needs.
Liquidity remains a critical concern.EHang had $22.2 million in cash and equivalents. The company recently secured an additional $23 million through private placements to support its operations. Despite these efforts, EHang’s future largely hinges on its ability to enhance operating cash flows and secure further funding.
With many better picks out there besides EH, the company makes it one to sell due to the high risk involved.
Archer Aviation (ACHR)
Archer Aviation (NYSE:ACHR) is facing significant financial hurdles. With only $408 million in cash on hand, the company might run out of money within 1.5 years without additional capital raises. The transition to production requires over $1 billion, which means heavy dilution for current shareholders.
The company reported a net loss of $457.9 million for FY2023, with GAAP operating expenses amounting to $446.9 million. Despite these losses, Archer secured $215 million in investment to support its path to market.
Analysts have a cautious outlook on Archer, noting the need for significant capital to achieve its production goals. The company’s financial health highly depends on the successful certification and commercialization of its eVTOL aircraft, such as the Midnight, which is in the final certification phase.
Investing in early-stage companies may always be risky, but ACHR’s risk of ongoing share dilution to investors makes it one of those flying car stocks to sell.
Lilium (LILM)
Lilium (NASDAQ:LILM) faces operational and financial challenges. Reports have raised doubts about its aircraft’s flight capabilities and range. Additionally, the company has had to raise substantial funds through private placements, diluting shareholders by almost half.
Operationally, Lilium’s progress includes producing high-performance battery packs and integrating Garmin standby flight instruments into its jets. However, the company faces skepticism about whether it can meet its ambitious performance claims and achieve successful certification and commercial deployment.
Analysts have a mixed outlook on Lilium. While some see potential upside, the average price target remains low, reflecting skepticism about the company’s ability to achieve commercial viability.
Like with EH and ACHR, other picks in the market could prove to be more worthwhile (and less risky) options than LILM. This makes it one of those flying car stocks to sell due to offering excessive risk without a proportionate upside reward.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
