Rivian Or Lucid Motors, Both Look Good For The Long Haul, Which Is Best Right Now?
Electric vehicle (EV) stocks remain one of the most intriguing plays for investors. After a sharp sell-off earlier this year, stocks of EV companies are beginning to re-inflate. And two of the hottest stocks in the sector are Rivian Automotive (NASDAQ:RIVN) and Lucid Group (NASDAQ:LCID).
We visited this debate about a month ago. But recent events are causing significant price movement in these two stocks for different reasons. And in this article we’ll take a look at both and offer a suggestion as to which may be the better buy right now.
Lucid Motors Is Pre-Revenue No More
Lucid Motors received two bullish catalysts in November. First, the company began delivering its Lucid Air Dream Edition EV. The luxury EV is appealing to the high net-worth individuals that, for the time being, are driving EV adoption. And, it’s a direct competitor of Tesla (NASDAQ:TSLA).
The second catalyst was due to being named MotorTrend’s Car of the Year for 2022. This is significant for many reasons, but notably because it is the first time an initial product from a new brand has earned this distinction.
And if investors need more to be bullish about, they can look at the company's balance sheet. With nearly $5 billion in cash on hand, the company appears to have enough capital to get through 2022.
On the other hand, LCID stock fell about 10% on news that it was issued a subpoena from the Securities & Exchange Commission (SEC). The issue seems to center on unanswered questions from when the company went public via the special purpose acquisition company (SPAC) Churchill Capital Group IV.
Investors may also be concerned about the company biting off more than it can chew. Lucid says it will begin to produce its lower end Lucid Air models next year. And in 2023, they will start production on the Gravity, it’s electric SUV offering. In that context, the company’s forecast to manufacture 90,000 vehicles by 2023 feels disappointing.
Earnings On Deck For Rivian
Unlike Lucid Motors, Rivian remains a pre-revenue company. However, investors will get a first look at the company’s financials when it reports earnings on Dec. 16, 2021. At this time, Rivian sits in a somewhat uncomfortable position regarding its earnings report. It’s unclear how much boost it can get from an earnings report in which the company won’t report any revenue. But their stock could take a hit if they fail to meet elevated expectations, whatever those may be.
However, like Lucid Motors, Rivian has also been recognized by MotorTrend. In this case, they earned the distinction of being MotorTrend’s 2022 truck of the year. In fact, the ratings agency described it as "the most remarkable pickup truck we've ever driven."
That was enough to give RIVN stock a 14% boost and, perhaps more significantly, it stopped the 39% skid in the company’s stock since it hit its post-IPO high in mid-November.
And The Winner Is...
Lucid Motors has a market capitalization of $67.70 billion as of this writing. While that is significantly lower than the $87.2 billion it was at less than a month ago, it still may seem richly valued. However, with Rivian having a market capitalization of over $98 billion, LCID stock may look cheap by comparison.
Either way, an investment in these stocks is an investment in brands that are in their infancy. And they should be formidable competitors in the EV space if they can effectively get their operations to scale.
For investors willing to take a long position, both stocks may be worth holding. However, as a short term proposition, if forced to choose only one, the nod at this time still goes to Lucid Motors. The company has shown it can deliver vehicles, has an efficient battery solution, and has made a prudent decision to not build a proprietary charging network. And, while both companies are years away from turning a profit, Lucid will at least have revenue for investors to consider.