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Hence, investors must acknowledge that not all the players in this booming market possess sound fundamentals. In fact, the stock prices of many EV players have been witnessing a correction this year due to investors’ concerns over the industry’s overvaluation and production delays due to a global semiconductor chip shortage. Furthermore, investors should take a judicious approach following the huge success of Reddit’s online forum r/wallstreetbets (WSB), which largely targets struggling businesses and gains from them by squeezing short sellers out of their positions. The fundamental weaknesses in most of Reddit plays have caused the short squeezes to be short lived, with the stocks declining quickly after reaching their highs.
Hence, considering the clear disconnect between the fundamentals and price levels of highly speculative Reddit favorites Canoo, Inc. (GOEV) and Lordstown Motors Corp. (RIDE), we think it’s wise to avoid them now. These stocks have witnessed significant price declines lately and are susceptible to further pullbacks.
