EV Startups Are in Bother. Buyers Do not Care.

The shares of quite a few just lately listed electric-vehicle firms are exhibiting outstanding resilience within the face of serious turmoil at their companies. Lordstown, semi-truck maker Nikola Corp. NKLA -2.94% and electric-car maker Canoo Inc. GOEV 0.40% all have share costs which can be in step with, or above, the costs from after they struck offers to go public by merging with special-purpose acquisition firms, or SPACs, final 12 months.

Nikola has a market capitalization of $6.5 billion, up greater than 60% because it struck its deal to checklist final 12 months. Months later, the corporate’s govt chairman resigned after a brief vendor accused the corporate of misrepresenting its expertise. The corporate, which denied allegations of fraud, then scuttled a number of new forms of autos it beforehand marketed as key to its enterprise, and a partnership with Normal Motors Co. largely fell aside.

Canoo introduced this spring it dropped quite a few points of its marketing strategy that it offered to buyers months earlier, and its CEO, CFO and co-founder all left the corporate. It has a roughly $2.four billion market capitalization, unchanged from when it struck the deal to checklist publicly. Not one of the three firms have begun business manufacturing of autos.

Serving to clarify the seemingly unshakable shares is the flood of newbie buyers who guess on shares of latest automotive makers that went public by way of SPACs prior to now 12 months, analysts and observers of the sector say. Motivated by the promise of quick development and optimism about an electrical vehicle-filled future, these particular person buyers helped push the shares of quite a few new firms within the sector to traditionally lofty valuations by conventional auto maker requirements.

It’s unclear precisely how a lot of the electrical automobile firms’ buying and selling is affected by newbie buyers versus hedge funds and Wall Road establishments, which additionally personal a number of the shares. Some merchants have positioned bets that firms on this sector will drop in worth.

The resilience of those shares has befuddled many watching the business.

“Regular basic and financial evaluation would lead you to a reasonably dire end result” for a number of the firms, mentioned Jon Lopez, an analyst who covers the new-electric automobile firms for Vertical Group. However the monetary world is awash with cash and starved for investments that develop rapidly, he mentioned, resulting in unusual outcomes like this 12 months’s Reddit-fueled rise of so-called “meme shares” that had been boosted by buyers who posted calls to ship shares of sure firms “to the moon.”

The dynamics at play are just like Telsa Inc., the electric-vehicle firm run by Elon Musk that has greater than quintupled in worth since early final 12 months to turn out to be the world’s most beneficial auto maker, mentioned Bradford Cornell, a professor emeritus at College of California Los Angeles’ enterprise faculty. Tesla’s share value typically goes up for little clear motive, whereas unfavorable occasions typically have little or no affect. Buyers are extra centered on a future narrative of extraordinary development than the current day-to-day, he mentioned.

“Is the narrative nonetheless plausible? Whether it is, there’s no motive why it could’t go up,” he mentioned of those firms’ shares.

Lordstown, Nikola and Canoo every have expressed optimism about their companies, saying they’re pointed in the best route after latest turbulence. Executives in any respect three have highlighted important progress even amid their struggles—a growth that appears to have tided over buyers.

Lordstown executives mentioned this week they’re nonetheless on monitor to start out producing some pickup vans this fall, and demand seems to be sturdy. The corporate is within the technique of looking for new funding. Nikola has mentioned it’s on monitor to ship its first electrical vans later this 12 months, and just lately struck a deal to lift one other $300 million.

Quite a few firms within the electric-vehicle business are “attempting to get by way of SPAC puberty,” mentioned Tony Aquila, Canoo’s chief govt and chairman. After becoming a member of the board final 12 months, Mr. Aquila scrapped a number of points of Canoo’s marketing strategy, together with a plan to hire most prospects automobiles month by month—modifications he mentioned he made to carry Canoo’s enterprise in step with what’s achievable. He mentioned he needs to Canoo “underpromise and overdeliver.”

The shares of Lordstown, Nikola and Canoo are down considerably from their highs, though the identical is true for the shares of different electric-vehicle makers, as the marketplace for high-risk shares has cooled since a burst of enthusiasm late final 12 months. The shares of the three electric-vehicle makers additionally haven’t been resistant to dangerous information, however the dips on regarding revelations had been lower than many analysts anticipated, and the share costs typically recovered a lot of their losses.

The buoyant atmosphere helped permit a burst of electric-vehicle startups to collectively elevate billions of {dollars} with ease prior to now 12 months by way of mergers with SPACs. They rapidly grew to become interesting for early stage startups in scorching sectors like electrical autos; SPACs permit startups to freely discuss their future projections and plans, in contrast to a extra closely regulated preliminary public providing.

Lordstown was a primary beneficiary. In its investor presentation from final summer season, it highlighted how it could make an electrical pickup that may be far more cost effective than a gas-powered Ford F-150. There was already sturdy demand from an extended checklist of shoppers who preordered the truck, the corporate mentioned, and manufacturing would take comparatively little funding as a result of the plant Lordstown bought from Normal Motors wouldn’t want a lot renovation.

These plans have unraveled.

Prices of outfitting the plant—which was beforehand used to construct a gas-powered sedan—proved far larger than anticipated. Ford introduced an electrical F-150 that was priced greater than 20 p.c decrease than Lordstown’s truck. The corporate acknowledged some preorders had been made by potential patrons who didn’t seem to have the assets to purchase the vans, and mentioned it acquired a subpoena from the U.S. Securities and Alternate Fee on the problem. Plant prices soared whereas full-scale manufacturing was delayed.

Peter Di Pasquale, a 30-year-old engineer from Pasadena, Calif., first invested in Lordstown in April after studying about it on-line, believing it could have the ability to produce a strong truck. He mentioned he’s conscious the corporate has important dangers, and the administration tumult prior to now week was regarding. Nonetheless, the corporate is nearing manufacturing of its pickup, giving it a leg up on different producers which can be months or years behind.

“The manufacturing unit is actual,” he mentioned. “The employees are actual.”

“I’m cautiously optimistic.”

Write to Eliot Brown at eliot.brown@wsj.com