Lucid Motors (LCID) stock is a popular name in the electric vehicle sector. The company went public via a SPAC merger through Churchill Capital IV Corp (CCIV). It was the largest deal yet between a blank-check company and an electric vehicle startup. The SPAC stock surged on strong rumours that they were acquiring the EV company. This was in a period where SPACs were the hottest thing on the market. The price surged from the standard $10 pricing to $30. Once the merger was confirmed, the price rose further to a high of $64.86. The price tumbled 45% when the valuation of the merger was announced, indicating the current price was too high. Investor sold off heavily. But the name always remained a popular one, seemingly having a cult-like following.

Anticipation of deliveries

However, the recent weeks have been strong for the EV sector and especially for Lucid Motors. The shares started to trade higher at the end of October amid momentum in the industry and anticipation of Lucid Air deliveries, the flagship model for the company. The price rose from $28.50 to $57 off this fresh momentum, a 100% gain.

Short term

Short term, Lucid Motors stock may have more highs. Much depends on the rest of the sector. Tesla had their own rally off the back of the Hertz deal but pulled back when Elon Musk announced he was selling a 10% stake of the company. The price was supported at $1,000 and reclaimed a further 20% move up in price. Lucid and other EV names such as Fisker have experienced more choppy price action in the past week. Most stocks tried to push up in price on Monday, but general market conditions held them back. They opened today and many of them have seen more selling than buying.

If the S&P500 recovers this week, I think names such as Tesla, Lucid and Fisker could all break recent highs. On the other hand, more fear among the market could lead to further drops in price. This would be better to avoid and look for short term positions once the market shows some balance in price (sideways action) or a strong bounce off support.

Long term

The real benchmark for Lucid is how well it does compared to Tesla. We think Elon Musk’s company could stay in the lead for many years to come, but that doesn’t mean Lucid can’t outperform themselves. Many investors who have missed the incredible opportunity of buying Tesla at much cheaper prices will be looking for the next one. Lucid is likely to be the best bet.

Where Tesla and Lucid are different is what they have achieved so far. Tesla has a proven track record of models, deliveries and financial performance. All these have been factored into the current price. Lucid is in a much early stage. Its flagship model, the Lucid Air, won Motor Trend‘s prestigious 2022 Car of the Year award. They quoted it as “a high-performing, long-range, game-changing electric sedan.” Deliveries are just getting started meaning there is much more room for growth that can be added to the price in the future.

A recent IPO, Rivian, saw huge buying demand on release after it was announced Amazon had a large stake in the company and they would receive large orders to be used as the delivery vehicles. Combine this with Hertz order of 100,000 Tesla vehicles and it is clear to see the growing industrious demand of EV vehicles, not only the personal vehicle demand.

There are traditional automakers trying to break into the EV market, along with start-ups with several advantages of their own. Lucid CEO and Chief Technology Officer (CTO) Peter Rawlinson has long said the EV race is about technology, not cars. That’s telling, especially since he previously worked for Tesla and was the lead engineer in developing the Model S sedan.

Upcoming earnings

This could be a major turning point to see Lucid really take off long term. Although the third quarter results recently came out, November 15th, we think the next earnings call could be pivotal. These fourth quarter results will include delivery numbers of their model. Tesla has often outdone estimates and seen the stock price benefit. If Lucid were to follow the same path and beat expectations, we could see huge momentum for the price as investors better understand the future potential.

Risk

The EV market is very volatile, often exploding in price and seeing large pullbacks. Also, there is a concern that for companies like Tesla, the price has factored in the next 10 years already and may struggle to grow anymore. Some think that we are in an EV bubble that is set to explode. A large correction in Tesla would affect Lucid as investors would be more fearful of the sector.

Overview

We believe Lucid Motors stock is one of the top companies to really compete in the EV market over the next years. The sector should continue to grow as more demand is realised (unless we burst this potential bubble). Lucid looks set to do well as investors can factor in more growth in the upcoming months with the deliveries now in play. It may not have the same astronomical returns that Tesla has had over the past years, but this could still be one of the best opportunities available now.

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