Lucid Group Stock Is More Than Fully Priced, But It Has a Beautiful Car

Lucid Group (NASDAQ:LCID) stock may not have much further to go, but its Air Grand Touring model sure does.

A photo of the Lucid Motors Air EV from 2018.
Source: ggTravelDiary / Shutterstock.com

Lucid is finally in production and the rubber is hitting the road to great reviews.

Here’s what a recent MotorTrend review has to say after comparing the Lucid Air Grand Touring against Mercedes Benz top of the line EQS 580 4matic:

“[Lucid] presents one of the biggest threats to both legacy automakers and Tesla; we’re excited to see how the Lucid Air changes the game, and we’re even more excited to see what the company’s second effort looks like.”

This is the equivalent of winning a Pulitzer Prize for your first novel, or an Academy Award for your first film.

The trouble with that is, then everyone waits for a second vehicle to top it. When Tesla (NASDAQ:TSLA) started down this quixotic road it had its high-end sports coupe.

Of course, there was no competition and no one even thought it would work. Sales weren’t part of the expectation, simply building a functional EV was the accomplishment.

Currently, TSLA has four models in production, although it has had eight different models since it started building cars.

LCID Stock, Like Its Car, Ain’t Cheap

What we’re seeing with all of the EV makers that have been producing vehicles is their stocks are all outrageously overpriced. And I include TSLA in that lot.

Look, we’ve been living in a world where central banks have controlled money supply and interest rates for over a decade now.

That has been a boon for companies and billionaires who can borrow at next to nothing and fund ventures off their assets.

But most people aren’t realizing similar gains sitting in money markets, CDs, or even index funds.

So this era has become a great bonanza for new ideas, whether it’s EVs, crypto, decentralized finance (defi), fintech, meme stocks, or any of the dozens of other “home run investments” that are out there.

There’s no doubt this is all very exciting, and LCID stock deserves its accolades. The company has delivered a world-class car and that is certainly inspirational.

But the challenges that TSLA is still grappling with – parts and servicing issues, consistent build quality, etc. – are key to the success of these newcomers.

For example, if I have a problem with a Ford (NYSE:F) Lightning, I can go to a dealer to get it fixed. How do I get my LCID fixed? Watch a YouTube video?

When you have a market cap that rivals a company that produces millions of cars per year and you’re producing dozens, your real value is an illusion.

Bright Prospects, Patient Money

After all this and the other comments I’ve made in previous articles, my advice is this: If you own, hang on to it for the long term.

You have jumped in with more enthusiasm than forethought but it’s a good company with smart management.

It also has a very interesting partner in the Saudi Arabia Public Investment Fund. There’s a lot of potential in that piece of the deal.

If you haven’t purchased it, wait. LCID stock is like a dotcom stock in 1999 at this point. Not all dotcoms crashed and burned when the bubble burst, but the good companies that survived were significantly cheaper.

Interest rates are heading higher and the markets are starting to rotate into different investment sectors.

LCID stock is going to need more money and that money will be borrowed at higher rates. It’s going to have to start proving its value sooner rather than later.

TSLA stock had a much longer runway for success than LCID stock has. It will get cheaper. And when it does, buy it.

On the date of publication, GS Early did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

GS Early has been an award-winning financial writer and editor for nearly three decades, working with many of the leading financial editors (Louis Navellier, Richard Band, Steven Leeb, Jim Collins, Roger Conrad, Elliott Gue, Maria Bartiromo, Neil George, Keith FitzGerald, Michael Robinson, and more) during that time. He’s seen a few things and hears more.


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