$Lucid Group Inc(LCID)$ stock hangs on as the market goes risk-on, but if it falls it will come back
Lucid Group $Lucid Group Inc(LCID)$ stock still maintains a positive gain for the past 12 months. That’s hard to believe given the tumult stocks have been in since we entered 2022.
Granted it’s a mere 7% return, but there are plenty of electric vehicle (EV) stocks that aren’t that fortunate.
Some of that continued strength is the fact that the company hasn’t made the mistakes many new EV makers stumble upon.
You have the “oh, by the way we’re going to charge you $15,000 more for your car” that Rivian$Rivian Automotive, Inc.(RIVN)$ surprised hopeful wait-listers with last week. Also, the next wave of threats that many Chinese stocks are going to get delisted from U.S. exchanges – potentially NIO $NIO Inc.(NIO)$ – if they don’t comply to U.S. terms.
The fact is, launching a breakthrough EV car company has a lot more roadblocks than many anticipated. That affects everyone, investors and founders alike.
Even Tesla $Tesla Motors(TSLA)$ has lost 21% to date. If this turns into a full-fledged selloff, it has plenty of baggage to contend with.
For example, while it’s still pumping out just around 1 million cars a year, major car companies are now starting to launch their lines of EVs and many of them are gaining high praise. That means competition from below and above for TSLA. As soon as its market share takes a hit, it could get ugly.
LCID Stock Remains Attractive
LCID stock has stayed off its lows because it has built a luxury car that has drawn praise around the industry for its build quality and its 500-mile range.
Remember, LCID is using the strategy that you move into the space with a high-end car that you can produce in limited quantities to show proof of concept. Then you start building the rest of the line as you have the cash to scale.
The advantage that LCID also has is $3.4 billion from The Kingdom’s Public Investment Fund. While it rolls out cars in the U.S., it has also just announced plans to build a major facility in Saudi Arabia with the help of The Kingdom’s government. Not many other EV makers can boast that kind of long-term support.
Granted, LCID also has been navigating a few bumps in the road, as all startups do once they let their product out into the wild.
First, it had a front strut issue that required a recall on more than 200 cars in February. Then LCID stock released earnings that came in lower than expectations.
It also announced that it was cutting production and delivery outlooks for this year. That hit the stock, especially now that whole market is very sensitive to bad news.
EV Is a Long-Term Investment
The trouble with the heady days of this long-term boom market is that many investors forget about risk since everything usually continues to rise as people chant, “buy the dip!”
But there’s another saying about these markets, too. Everyone is a genius in a bull market.
Individual investors are getting a taste for that old saw right now.
Also bear in mind that LCID has significant short interest, which means there are still some big bets that the stock has more to fall. It also is an indicator of how investors feel about any EV maker that isn’t TSLA right now.
Source:INVESTORPLACE
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