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Why Hyliion Stock Got Crushed in 2021

What happened

2020 may have been the year of hope and lofty expectations for electric vehicle start-up companies, but 2021 brought a dose of reality. Hyliion Holdings (NYSE: HYLN) was one of those companies that promised to drive the electrification of Class 8 commercial semitrucks that investors pumped in 2020. But through the first nine months of 2021, the company still hadn't begun bringing in revenue, and investors punished the stock. As a result, Hyliion shares plummeted 62.4% in 2021, according to data provided by S&P Global Market Intelligence.

So what

Hyliion stock wasn't the only name in the electric semitruck space that had a rough year last year. Shares of Nikola, which makes batteries and hydrogen fuel cell electric trucks, dropped more than 35% for the year. But Nikola began delivering finished commercial trucks to customers before the end of the year, while Hyliion said delivery times have been delayed.

Image source: Getty Images.

Now what

Hyliion shares aren't likely to rebound anytime soon. The market has been shifting away from growth companies with only projected future prospects. With investors expecting a steady increase in the federal funds rate in 2022, those future potential earnings are looked at as being less valuable. Combine that with the fact that Hyliion has told investors to push back expectations, and it helps explain the stock's performance.

Hyliion also recently warned investors that competition may be impacting its prospects. In its third-quarter financial report, the company said this:

Due to shortages of various components caused by global supply chain disruptions, we are experiencing longer delivery times because of supply delays for a portion of the orders we have received on new Hybrid eX units. We expect to begin recognizing revenue on Hybrid eX units in the fourth quarter of 2021. In addition, we are assessing the potential demand impact for the Hybrid eX product offering in light of recent changes within the competitive landscape.

That competition likely refers to the previously mentioned offerings from Nikola as well as the expected new electric semitruck from Tesla. The first 15 Tesla electric semitrucks are expected to be delivered to PepsiCo by the end of this month, according to fleet management industry site Global Fleet. As fully electric Class 8 semi trucks hit the market, there could be less interest in Hyliion's hybrid solution.

Investors will need to watch how customers react to the new electric offerings from Nikola and Tesla, and how Hyliion management reacts to that. An investment in Hyliion should have been made with a long-term strategy from the beginning. But if the story changes due to competitive products, investors may need to rethink that strategy.

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Howard Smith owns Nikola Corporation. The Motley Fool owns and recommends Tesla. The Motley Fool has a disclosure policy.


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