Featured EV Of The Week -- Lucid -- May 7, 2022

Updates

May 7, 2022: another indication that "this" is not going to be easy. Link here. The share value of GM has dropped about as much as ARKK, and interestingly, money is continuing to flow into ARKK.

Original Post

A reader sent me this note. 

Saudi Arabia will partner with Lucid to make luxury EV sedans for the ultra-rich. 

Lucid is based in Mesa, AZ. The company says it will build a plant in the Saudi Arabia desert. 

Market cap:

• GM: $57 billion
• F: $57 billion
• Stellantis: $43 billion
• Lucid: $30 billion -- 360 vehicles 1Q22
• Rivian: $25 billion
• Nikola: $2 billion -- has delivered eleven vehicles
  

Top ten owners of Lucid Group. Link here. And folks wonder who pays for all the anti-fracking lobbying. 

News: 

Chart: 

Wager: Goldman Sachs  --

• advised Prince Muhammad bin Salman on the partnership
• sold their shares to the prince on November 29, 2021

Other links:

• IBD: link here.

Lucid posted a far smaller-than-feared loss. Lucid stock rose as the EV startup reaffirmed its production target.

For Q1, Lucid posted nearly $58 million in revenue, driven by 360 EV deliveries during the quarter, the startup said in its late Thursday earnings release. That suggests a small ramp from 125 EV deliveries in Q4 2021 amid "global supply chain and logistics challenges, including Covid-related factory shutdowns in China," according to the company statement. Lucid began deliveries of the luxury Air electric sedan on Oct. 30 last year. Lucid reported 30,000 Air EV reservations as of May 5. That was up from 25,000 reservations in February and represents a total of $2.9 billion in potential sales.

One comment:

• Link here.
  

When multiple institutions own a stock, there's always a risk that they are in a "crowded trade." 

When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. 

Think AAPL.

Takeaways from the past week regarding EVs:

• Short term, a lot of companies took a big hit investing in EVs (noteworth: F and AMZN). Ford shares went from $25 to $14.
• There's a reason companies are partnering in the EV business.
• Long term: this is going to be very expensive for EV companies going forward.
• EVs: luxury sedans for the ultra-rich.
• Investors: there is no need to rush in. If interested, buy a few shares every week.
• Saudi Arabia: Lucid. Jumping the shark.
• A big [fill in the blank] bank (Goldman Sachs) sold some [fill in the blank] (Saudi Arabia) their shares in Lucid; the former made a killing; the latter, killed. They just don't know it yet.
• We see this every time when there's an oil boom: Saudi Arabia spends money like a drunken [person]. No difference this time, spending $6 billion on Lucid when for that much money could have bought 10% of EOG. Or all of Nikola and Lordstown Motors.

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IPO Watch Next Week

IPO watch: 

• The biggest wildcard in the IPO market in the week ahead is the lockup expiration for Rivian Automotive. 
• Close to 800M shares will be freed up to be sold by investors if they desire. 
• That tally includes 100M shares of Rivian held by Ford (F) and 160M shares by Amazon (AMZN).
• The two companies own more than 28% of Rivian together and the fair market value of the electric vehicle maker is reported quarterly as part of their total profit or loss. 
• In some cases, stocks rolling off a big IPO lockup rally over the following week with a major overhang removed. 

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Tesla

Link here.

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EOG