Lucid Motors (NASDAQ:LCID) is enjoying the week so far, with shares up almost 7.5%. A bulk of those gains are coming on Wednesday, with LCID stock up more than 6%. While bulls are happy with the gains, they are certainly looking for more given the recent action.
Providing the boost is news out of Casa Grande, Arizona. Reportedly, the Pinal County council has “approved its portion of the development agreement, as well as a lease and purchase agreement for the 1,300 acres and a large bond that could go toward buying the site.”
Further, “The new agreements will bring the Lucid site to about 2,000 acres overall for a potential expansion and requires Lucid to pay an annual rent of $7.1 million for four years with an option to buy the property.”
However, it’s not the only electric vehicle (EV) stock rallying on the day.
Rivian (NASDAQ:RIVN) shares are higher by more than 10% following a delivery update. Investors are breathing a sigh of relief as the company produced and delivered more than 4,400 vehicles in the second quarter and said it expects to deliver 25,000 vehicles this year.
Some view the news as bullish sentiment for LCID stock, but it could imply good things for the automaker too. While Lucid hasn’t updated investors on its second-quarter production results, it had previously cut its full-year outlook due to supply chain issues.
Rivian previously cut its full-year outlook too, so the fact that production now appears stable could bode well for Lucid.
Can LCID Stock Continue to Climb?
There are multiple headwinds weighing on Lucid Motors right now. Some are company specific and others are more broad.
Speaking broadly, concerns of a global recession are hurting the company’s prospects. While rising fuel prices certainly have consumers looking at EVs as a solution, that doesn’t do a lot of good in the midst of a recession. However, perhaps the even bigger issue is the bear market in growth stocks.
EV stocks exploded onto the scene in 2020 and 2021. While these names were soaring to unimaginable heights, their eventual demise was not hard to see coming. Down 77% at the recent low, LCID stock sure has paid the price. Until the bear market ends though, it will likely be difficult for Lucid Motors to enjoy a sustainable rally.
As for the more company-specific issues, Lucid has been struggling with supply chain issues. However, bulls are hoping that these constraints eased over the last few months — like they did with Rivian.
If so, that may give LCID stock more room to run, provided that the overall market also enjoys a relief rally.
On the date of publication, Bret Kenwell 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.