The Next Tesla: Should You Buy the Dip in This Exciting EV Stock?

Tesla Inc. (NASDAQ:TSLA) stock has floundered in recent weeks, but investors should be extra cautious with Facedrive Inc. (TSXV:FD).

| More on:
Question marks in a pile

Image source: Getty Images

The remarkable bull run for Tesla started after the sharp market pullback in March 2020. It would finally come to an end as a bout of turbulence led to a steep loss for the stock this February. Tesla shares are still up over 440% in the year-over-year period. Today, I want to look at a stock on the TSX Venture exchange that is making waves in the electric vehicle (EV) space. Should you look to grab this EV stock right now? Let’s dive in.

Why Tesla has lost momentum in recent weeks

Rising bond yields started to throttle the tech-heavy NASDAQ in February. Tesla and its peers have enjoyed over a year of red-hot returns. That has come to a screeching halt in the late winter of 2021. However, Tesla stock was up 18% in early afternoon trading on March 9.

Bond yields and the U.S. dollar were in retreat at the time of this writing. This sparked a run for tech stocks and for the spot prices in gold and silver. Still, inflation concerns are spurring anxiety in North American markets. Tesla and its peers in the tech space are not out of the woods yet. On the other hand, Canadians should still look to get in on exciting EV stocks.

Where is this Canadian EV stock headed?

In February, I’d discussed whether Facedrive (TSXV:FD) had the potential to serve as a Canadian Tesla. Facedrive operates as a ride-sharing company in Canada. Its shares have increased over 90% in 2021 so far. The stock is up over 700% in the year-over-year period.

Facedrive is expected to release its final batch of 2020 results later this month. This company offers an “eco-friendly” choice to consumers. It will begin the launch of its EV ride share in Toronto this month. Facedrive offers some Canadian flavour in the ride-share space, but it is facing stiff competition. Uber and Lyft are also aggressively marketing their EV alternatives. These firms can dramatically outspend Facedrive and are already a dominant force for consumers in Canada.

This EV stock has surged over the past year, but revenues are still lagging. Shares have dropped 44% over the past month, mirroring the struggles of Tesla and other tech stocks. The EV market holds huge promise as we look forward. According to Precedence Research, the global electric vehicle market is expected to register a CAGR of 40% from 2020 to 2027. The adoption of EVs in the mainstream market will increase significantly over the course of this decade.

Should you buy Facedrive instead of Tesla today?

It is hard not to get excited about the potential of the EV market. Tesla is a proven commodity in this realm, though it has chased production targets for years. Facedrive, by comparison, is the definition of unproven. Canadian investors should be very cautious if they are looking to bet on this hot EV stock right now. I’d look to target other stocks that are linked to the EV market today.

Magna International is an auto parts manufacturing giant that is well worth a look in March. Meanwhile, BlackBerry’s strong position in automobile software development also grant it exposure to the EV space.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends BlackBerry, BlackBerry, Magna Int’l, and Uber Technologies.

More on Investing

worry concern
Dividend Stocks

Worried About a Recession? 2 Canadian Blue-Chip Stocks to Buy and Hold for Dear Life

A recession is worrisome. Buying two blue-chip TSX stocks and holding them for the long term will deliver stable, less…

Read more »

online shopping
Tech Stocks

Why You Should Buy Shopify Stock Before It Rockets Even Higher!

SHOP stock is down 70% from all-time highs. Let's see why it makes sense to buy the dip in February…

Read more »

money cash dividends
Dividend Stocks

TFSA: 3 of the Best Canadian Dividend Stocks to Buy This Year

Are you looking for some of the best Canadian Dividend stocks to buy this year? Here are three great options…

Read more »

Golden crown on a red velvet background
Energy Stocks

3 Canadian Dividend Aristocrats to Buy and Hold for Passive Income

Are you seeking safer options amid elevated market volatility? Consider these three Canadian dividend aristocrats to receive uninterrupted passive income…

Read more »

A colourful firework display
Tech Stocks

3 Venture Capital Stocks That Started 2023 With a Bang

Even if a company starts a year strong, it may not hold that momentum throughout the year. Still, these VC…

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

Suncor Energy Stock: Has it Bottomed Out?

Suncor Energy Inc (TSX:SU) stock has been falling lately. Has it bottomed out yet?

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Stocks for Beginners

2 Top Stocks to Buy in February 2023

Here are two of the best Canadian stocks you can buy in February 2023.

Read more »

Aircraft wing plane

Bombardier Stock: Should You Invest in the Current Bullish Trend?

Capturing a bullish trend from beginning to end is an exception, not the rule. In most cases, you will only…

Read more »