Written By
Sheikh Hasib Ahmed
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The two most well-known electric vehicle startups in the US are experiencing divergent fortunes, and Wall Street is clearly taking a side that isn't Lucid Group Inc.
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The stock has recently reached an all-time low and is down about 25% so far this year, versus a 1% decline for Rivian Automotive Inc., a rival manufacturer of pickup trucks, during the same time period.
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Only approximately a quarter of all recommendations for Lucid's stock now have optimistic analyst ratings. More than half of the evaluations for Rivian correspond to a purchase.
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Deeper differences are shown in the performances. According to a Bloomberg Intelligence estimate, Lucid will spend $338,000 on each car it produces this year,
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But it stated in August that it still planned to build at least 10,000 vehicles by the year 2023. Over the past six months, the average analyst's 2023 revenue estimate for the company has dropped by over 50%.
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Rivian, which according to Bloomberg Intelligence is anticipated to lose almost $110,000 per vehicle, predicted full-year production of 52,000 units on Monday, and the average projection for its 2023 sales has increased by roughly 5%.
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According to Jerry Braakman, chief investment officer at First American Trust, "Lucid is well below the pace required to hit even 10,000 cars this year, and that's why they continue to bleed money.
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This is why Lucid and Rivian were able to command premium values that they still enjoy above other upstarts thanks to their wealthy investors, Saudi Arabia's Public Investment Fund for Luci,d and Amazon.com Inc. for Rivian.
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But at a time when markets are battling the threat of higher interest rates for a longer period of time and tighter liquidity, that only goes so far.
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After the company announced plans to issue $1.5 billion in convertible debt, Rivian shares fell 23% on Thursday.
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Earlier this year, Lucid sought funding from the stock markets and received a boost from the Saudi fund, a decision that is normally unpopular with shareholders.
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"It dilutes the stock, so from a common investor's standpoint, that is a tough space to be in," Braakman continued.
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The corporation declined to comment on the story because it is now in a quiet time before reporting its third-quarter profits.