There’s an interesting dichotomy building in today’s market. Electric vehicle (EV) leader Tesla (NASDAQ:TSLA) is up more than 4% at the time of this writing. Meanwhile, shares of EV startup Lucid Group (NASDAQ:LCID) have dropped by about 5%. This decline in LCID stock compounds its year-to-date (YTD) loss, which now stands at over 80%.
There are many reasons for this decline. For one, the overall sector has been hit hard. Even Tesla is down roughly 50% so far this year. However, the news today is that Elon Musk has once again shared his view that Lucid may not be able to survive this bear market.
Commenting on a post citing Lucid’s measures to ensure orders do not get cancelled, Musk wrote on Twitter that the company is “not long for this world.” This isn’t the first time Musk has expressed his view that Lucid and other EV startups may be doomed. Earlier this year, the Tesla CEO claimed bankruptcy was a possibility for Lucid and others.
Given Elon Musk’s reach and influence in this space, investors are clearly taking notice. Let’s dive into what to make of his most recent comment.
Is LCID Stock Doomed?
For a CEO who has denounced the fear, uncertainty and doubt (FUD) he claims has been spread about Tesla for years, Musk’s comments on his competitors are interesting. Of course, it’s in his best interest to divert attention away from the TSLA stock price, which is down incredibly this year. But for a CEO who initially focused on the progression of the EV sector above all else, these comments don’t seem to fit with the company’s mission of promoting a greener future for all.
That doesn’t mean that Lucid isn’t battling some serious headwinds. Along with all EV makers, Tesla included, car buyers are forced to contend with surging financing costs. Higher interest rates mean more expensive car loans. For luxury EVs like those made by Lucid and Tesla, that’s not a good thing.
Given how early-stage Lucid’s overall business is, there’s certainly reason for investors to be concerned. Indeed, other analysts appear to be on the same page as Musk. That said, the fact this tweet has seemingly moved the LCID stock price so much makes one wonder about the U.S. Securities and Exchange Commission (SEC) imposed “Twitter sitter” that’s supposed to be monitoring Musk’s tweets. If anything, the comment seems like a move to promote FUD from a man who has fought against naysayers perhaps the longest in this sector.
On the date of publication, Chris MacDonald did not hold (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.