The primary six months of 2022 have been excruciating for fairness traders. A number of development shares throughout a number of sectors have misplaced important momentum attributable to various macroeconomic factors.
For instance, shares of electrical automobile (EV) firms resembling Lucid Motors (NASDAQ: LCID) and Rivian (NASDAQ: RIVN) are down 68% and 84% respectively from all-time highs. Along with sky-high valuations, EV shares are wrestling with provide chain disruptions, rising enter costs, an uptick in rates of interest, and the specter of an financial recession.
Regardless of the continued meltdown in 2022, the long-term prospects for EV shares, together with Lucid Motors and Rivian, are compelling. The worldwide shift in the direction of clear vitality options ought to act as the important thing catalyst for electrical automobile producers within the upcoming decade. Protecting these elements in thoughts, let’s see which EV inventory is a greater purchase between Lucid Motors and Rivian proper now.
Is Lucid inventory a purchase in 2022?
Valued at a market cap of virtually $30 billion, Lucid Motors delivered 306 automobiles in Q1 of 2022, reporting income of $57.7 million. Lucid Motors acknowledged that it continues to get pleasure from sturdy buyer demand for the Lucid Air, as reservations have exceeded 30,000 items as of Could 5, reflecting potential gross sales of virtually $3 billion.
Along with buyer reservations, LCID has signed a cope with Saudi Arabia to ship 100,000 automobiles within the subsequent ten years.
The corporate expects to ship between 12,000 and 14,000 automobiles in 2022, whereas analysts count on gross sales to rise to $1.38 billion this yr. Given consensus estimates, Lucid’s income may greater than double to $3.46 billion in 2023.
Lucid Motors ended Q1 with a money steadiness of $5.4 billion which ought to fund the corporate properly into 2023. Along with the Lucid Air, the corporate started deliveries of the Lucid Air Grand Touring in Q2 — a automobile with an estimated driving vary of 516 miles on a single cost.
Throughout its earnings name, Lucid Motors emphasised that the world has modified radically because it first introduced costs for the Lucid Air in September 2020. Whereas it is going to honor its present pricing for current reservation holders, automobile costs have elevated this month to accommodate rising commodity prices.
Ought to Rivian inventory be a part of your portfolio?
Rivian’s market cap stands at $23.8 billion regardless of the drawdown in share costs this yr. Within the final 12 months, Rivian has launched its flagship automobiles such because the R1T, R1S, and EDV. The corporate went public in This fall of 2021 after elevating $13.7 billion in gross proceeds by way of an preliminary public providing. Rivian ended Q1 with a money steadiness of $17 billion, which is sufficient to assist its money burn for the following three years at present charges.
Rivian’s manufacturing plant in Illinois has an annual capability of 150,000 items, permitting the corporate to ramp up manufacturing capabilities at a gradual tempo. Backed by heavyweights such as Ford and Amazon, Rivian could have entry to liquidity capital in case it chooses to speed up manufacturing numbers. Amazon has additionally pre-ordered 100,000 electric-powered pick-up vans from Rivian, which will likely be delivered by 2030.
As of Could 9, Rivian has manufactured round 5,000 automobiles and expects to provide 25,000 automobiles by the top of 2022. Its gross sales are forecast to the touch $1.83 billion in 2022 and $6.46 billion in 2023, making it one of many prime development shares within the EV house.
The underside line
The 2 firms should wade via provide chain complexities whereas specializing in increasing their workforces Each Rivian and Lucid have sufficient money available to navigate an unsure macro-environment and prolonged interval of damaging money flows.
LCID inventory is valued at a ahead value to 2023 gross sales a number of of 8.7x, whereas this ratio for Rivian stands at 3.7x. On account of its increased estimated development charges, stronger liquidity place, and decrease valuation, Rivian appears a greater purchase than Lucid inventory proper now.