A Lucid Air.
Courtesy Lucid Motors
Electric-vehicle investing can be confusing, but it is never dull.
Old-line businesses with lots of experience at making cars are trying to morph into growth companies. Companies that have never made anything get multibillion-dollar valuations from investors betting the startups will take market share from their decades-old counterparts. And then there are the daily stock moves.
Take Lucid (ticker: LCID)–the EV startup run by former Tesla (TSLA) executive Peter Rawlinson. Shares were up 11.4% in afternoon trading on Tuesday, while the S&P 500 and Dow Jones Industrial Average fell 0.1% and 0.2%, respectively. Equally striking, the shares rose 4.8% in Monday’s brutal trading session.
There isn’t a lot to pin the gains on. No analysts have issued high-profile ratings changes, and no other big news has landed.
A recent post on Twitter (TWTR), though, could be fueling gains. Lucid has apparently registered 10,000 vehicle identification numbers as it moves toward producing its first cars. Lucid declined to comment on VIN registrations.
Registering VINs is a step toward the start of sales, but it doesn’t necessarily mean all 10,000 cars would be shipped at once, or even soon.
Two other positives for Lucid stock came this past week. First, the Environmental Protection Agency gave the Lucid Air a range rating of 520 miles per charge. That is the highest for an electric vehicle in the U.S.
Second, Bank of America recently likened Lucid to the Ferrari (RACE) of the EV landscape. Analyst John Murphy launched coverage on Sept. 15 with a Buy rating and $30 price target. That is also good news, but it was last week.
Ferrari doesn’t sell a lot of volume. The stock, however, trades like shares of a luxury-goods company, not a car manufacturer. Ferrari shares are selling for about 39 times the earnings expected for 2022.
The result of all that news is a 41% gain in Lucid stock over the past seven trading sessions. At recent prices, Lucid is worth about $43 billion, a lot for a company with only a couple of analysts covering it. Ford Motor (F), with a market capitalization of about $50 billion, has more than 20 analysts covering its stock.
That could be the final reason for Lucid stock’s big move. Less Wall Street coverage doesn’t help suppress volatility; it probably adds to it. Analyst coverage helps set expectations and reduce the number of surprises investors encounter daily. Analysts don’t know everything, but investing is difficult, so it is nice to have help.
investors love to see a stock shoot up, but riding out volatility isn’t fun. Owning Lucid stock involves both: Shares are still down about 59% from their February 52-week high.
Write to Al Root at [email protected]
