It wasn’t too long ago that Lucid Group (NASDAQ:LCID) stock was trading in the 60s. Now it’s around 28. And it may have more bottom than top here.
Granted, LCID stock still carries a massive market capitalization of $46 billion due to the “Tesla Effect.” By that I mean, Tesla (NASDAQ:TSLA) carries a massive market cap for a company that’s thrilled to deliver — or I should say its analysts are thrilled it delivered — less a million cars in 2021. But that’s an 87% increase in deliveries from the year before. And it’s market cap is about $909 billion.
I would say TSLA is fully priced, even with better numbers. But that’s just me. I mean a market cap of more than three-quarters of trillion dollars for less than a million cars. Call me old-fashioned, but that doesn’t seem like a screaming buy.
There was some discussion about the release of TSLA’s recent Q4 earnings. And of course it was about the impossibility of understanding what it was going to mean for TSLA or competitors like LCID stock.
EV Competition Is Rising from Rivals Like LCID
My view on this whole sector is, there has been way too much money dumped into these stocks. Now, Wall Street knows how to make hay with seemingly insatiable demand.
And Wall Street is also very good at pushing the narrative that everyone wants to hear. The most recent tension was that are good TSLA earnings good for the rest of EVs or bad?
The “logic” is, if TSLA is doing well does it take business away from its competitors? Or does it mean there’s a rising tide for all boats?
But the questions are merely rhetorical, since Wall Street is very mercurial about its logic. If you want a good technical piece on why LCID stock is buy now, Chris Tyler shared one earlier this month that’s worth a look.
In my humble view, sitting more than 50% off its highs, LCID stock is in much more comfortable territory than it was in November or December. And it seems to have stabilized here. But I still think this market has more downside left.
Unless capitulation is no longer part of establishing a bottom any longer, we have yet to hit that stomach-in-your-mouth feeling that goes along with a real bottom.
Who’s Value Investing?
The reality however, is investors aren’t buying LCID stock for its value. They’re buying it for its growth. And there are few stocks where you get to watch videos like this of the products it makes doing fun stuff.
But that’s just the thing. Cool drag racing is no reason to buy a stock. It may be a reason to buy the car but dropping $150,000 plus on a top of the line model isn’t exactly a car for the masses.
And now that models are rolling off the line with greater frequency LCID is hearing about some build issues. TSLA and all the other electric vehicles (EV) makers have or will run into these problems. TSLA has run into significant recalls and that hasn’t cooled investors’ ardor.
Bottom Line
The fact is, the best thing EV companies like LCID have going for them is that the future is bending in their direction. Being early to market in a new, promising sector like EVs is crucial.
Remember, LCID also has a big money backer in the Saudi Sovereign Wealth Fund. And it announced plans to build a factory in the Kingdom of Saudi Arabia by 2026. This gives LCID stock a real bottom and serious financing for the future.
Also, in the US, EV car companies are now lobbying states to overturn the antiquated dealership laws to make it easier to sell their vehicles. There’s already legislation moving through New York.
All this is very promising, but it may take a while. Don’t expect to make a fortune in the next year. The big tech giants didn’t get to where they are overnight.
LCID stock is at a decent price, and if you can’t wait, at least buy a little over the next six months. In the long run, you’ll be much better off.
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 during that time. He’s seen a few things and hears more.
