Clean Tech Valuations Are Wildly Out of Sync With Company Profit

Investors bullish on the green transition have sent clean-energy stocks to unprecedented levels. But behind the skyrocketing valuations of electric-vehicle and battery makers is a sobering reality: companies hemorrhaging money.

The Wildherhill Clean Energy Index, which tracks the clean-energy sector, has seen its value surge more than 300% to $1.3 trillion during the past year. Its 56 member companies posted combined net losses of $6.4 million in the 12 months ending in September 2020, according to data compiled by Bloomberg.

Clean Tech Valuations Are Wildly Out of Sync With Company Profit

Even the 10 companies with the least revenue have a combined market value of around $22 billion. Four of them -- Lordstown Motors Corp., Lithium Americas Corp., Fisker Inc. and Ayro Inc. -- posted no revenue at all in recent years.

Clean Tech Valuations Are Wildly Out of Sync With Company Profit

Of course, revenue isn’t the only gauge of a company’s viability, and optimists would say these valuations are a reflection not of a company’s current fundamentals but of how much it stands to gain as President Joe Biden embarks on an precedented climate push. Yet the trend recalls another era of breakneck technological advancement: the dot-com bubble, when scores of super-valued companies with little or not profit went bankrupt, leaving everyday investors holding the bag.

©2021 Bloomberg L.P.

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