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– Rachel Gearhart, Writer
A reader just lately requested that I run luxurious electrical automobile (EV) producer Lucid Group (Nasdaq: LCID) by The Worth Meter.
Lucid is much from the primary EV firm I’ve checked out.
And to say that I’ve not been bullish on EV shares is a monumental understatement!
To this point, each single time I’ve evaluated an EV firm, I’ve suggested readers to remain far-off.
Again in June 2020, Nikola Corp. (Nasdaq: NKLA) got here into my crosshairs.
I concluded that the corporate was absurdly overvalued.
The market rapidly agreed with me, and Nikola’s inventory has since dropped a surprising 96%.
Then, in October 2021, I examined Rivian Automotive (Nasdaq: RIVN) and once more got here to a bearish conclusion.
Rivian’s inventory quickly plummeted and is now down greater than 80%.
Extra just lately, simply over a month in the past, I put VinFast Auto (Nasdaq: VFS) by The Worth Meter.
But once more I concluded that the inventory was considerably overvalued…
And the share value of VinFast has already dropped by greater than half!
However what about shares of Lucid Group? Have we lastly discovered an EV inventory that presents an excellent worth for buyers?
My fast reply is, sadly, no.
Like each different EV firm I’ve profiled, Lucid Group has a really massive market valuation… however zero income!
Regardless of a gentle drop in its inventory value over the previous six months, Lucid nonetheless sports activities an enterprise worth of greater than $8 billion.
To me, that looks like an extremely wealthy valuation for an organization that has posted huge losses of $706 million, $4.7 billion and $2.6 billion over the previous three years.
And guess what… Over the primary six months of 2023, Lucid once more misplaced cash. Thus far this yr, this extremely valued EV maker has misplaced one other $1.5 billion.
Now, I perceive that Lucid is taken into account a high-growth inventory.
And development shares typically grow to be great investments after failing to make any cash of their early years.
However the issue that I’ve with Lucid is identical one I’ve had with the opposite EV producers I’ve analyzed: I don’t have any conviction that it’s going to ever develop sufficient to grow to be worthwhile.
The fact is EV manufacturing goes to be an extremely aggressive enterprise going ahead, and these younger EV pure performs might be competing with legacy automobile producers which have a lot deeper pockets.
Some development shares might be nice worth investments, however I don’t see that being the case with Lucid Group.
Shopping for shares of this firm at its present valuation is merely hypothesis.
Resulting from Lucid Group’s massive market valuation and the large losses it’s taking, The Worth Meter charges this inventory as being “Extraordinarily Overvalued.”
When you have a inventory that you simply’d wish to have rated by The Worth Meter, depart the ticker image within the feedback part beneath.