Call it a “meme stock.” Call it “over-hyped.” But, even as shares pull back, investors remain highly bullish on Ideanomics (NASDAQ:IDEX) stock. Does this mean you should jump in as well?

Not so fast. This former penny stock may be winning over investors with its transformation into an EV company. But, as it chases trends rather than sets them, it doesn’t look like your best option in this fast-growing sector.

How so? Instead of focusing on building a single business in EVs, Ideanomics is throwing darts at the board. Acquiring, or investing in, EV startups, buying this is like buying a lottery ticket.

Sure, given it has made several EV investments, it’s not an either/or proposition. Ideanomics has many ways it can win. The problem? With the company currently valued at $1.35 billion, much of any potential payoff from its long-shot investments is likely factored into today’s stock price. Add in shareholder dilution (more below), and it’s going to be tough for shares to move substantially further, if and when it finally does strike success.

Yes, as stocks like this one continue to be popular among investors, I don’t see this falling back to its prior price levels under $1 per share. But, barring another run of meme-stock madness, further moves higher in the near term don’t look attainable as well. So, what’s the best move? Stay away, as there are better opportunities out there for investors looking for exposure to the EV megatrend.

IDEX Stock and Its EV Portfolio

With its low share price (around $3 per share), and relatively low market capitalization, some may see this as a get-in-on-the-ground-floor EV play. But, just because it looks cheap, doesn’t mean high chances of outsized returns.

Sure, those who bought into IDEX stock, when it began its EV pivot, have seen tremendous gains. Investors who bought back in November, and cashed out during meme-stock madness, saw even greater gains, as shares briefly hit prices topping $5.50 per share.

Ideanomics shares have made a substantial pullback since then. But, don’t look at this as a “buy the dip” opportunity. Why? As I said above, instead of focusing on building a single EV business, this company is throwing darts at a board.

Check out the webpage for its Ideanomics Mobility unit, and you’ll see what I mean. The company has put all of its EV industry holdings under this umbrella. Subsidiaries and investments include:

• Medici Motor Works (a U.S.-based specialty EV startup)
• Mobile Energy Global (EV sales/financing business based in China)
• Soletrac (EV tractor startup based in U.S.)
• Treeletrik (Malaysia-based EV maker)
• WAVE (charging solutions for medium/heavy-duty electric vehicles)

Could one of these startups be a billion-dollar business in the making? It’s possible. But, only time will tell whether any of these early-stage companies successfully gets off the ground. This by itself isn’t the problem. The real issue is valuation. With shares priced as if future success is certain, buying at today’s prices does not appear worthwhile.

Valuation, Dilution Concerns With Ideanomics

With other EV plays trading at frothy multiples, it’s unfair to call out IDEX stock over valuation concerns. EV investors continue to value early stage companies in this sector on future projections, not current results.

But, given we have limited information about its EV holdings, today’s valuation looks like a pretty price to pay. In addition to valuation concerns, another red flag with Ideanomics has been its aggressive use of dilutive stock sales to raise capital.

In my last article on the stock (published Feb, 12), I discussed how it was very likely the company would pursue another stock sale. My prediction turned out to be correct. As reported on March 1, Ideanomics is raising $150 million via an at-the-market offering.

Yes, compared to the company’s current market cap, this deal isn’t that dilutive for those holding IDEX stock today. Also, the proceeds from this equity raise could provide the capital needed to turn its ambitions into tangible results. Yet, it transactions like this cut the pie into many more slices. If the company hits success with one of its ventures, this could limit the extent of future gains.

Put both concerns together, and the situation does not look to be in your favor. Shares have limited room to run, even if this sector remains hot. But, downside risk is very high, given its hype rather than substance supporting today’s stock price.

Shares Could Remain Inflated, But Still Stay Away

As the EV bubble hasn’t exactly burst just yet, Ideanomics shares could continue to remain inflated. But, compared to the scores of EV plays out there, this isn’t your best option.

Instead of taking a gamble with questionable odds, stick with the more focused EV plays out there, and skip out on IDEX stock.

On the date of publication, Thomas Niel did not (either directly or indirectly) hold any positions in the securities mentioned in this article.

Thomas Niel, a contributor to InvestorPlace, has written single stock analysis since 2016.