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Here's Why Lucid Shares Are Down Today

By Howard Smith – Dec 28, 2021 at 3:10PM

Key Points

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Investors are getting more choices for their EV dollars.

What happened

The stock of highly followed electric vehicle maker Lucid Group (LCID 5.45%) has been in decline over the last week, even without any specific news from the company. That trend continued today as shares were down 4.5% as of 2:13 p.m. ET. 

So what

There are several reasons that might explain why investors have been selling Lucid. It has a market capitalization of more than $63 billion and hasn't even shipped 1,000 vehicles yet. But there are other low- or pre-revenue EV names that are also extremely highly valued by traditional metrics. This chart might just help explain the recent slide in Lucid shares. 

TSLA Chart

TSLA data by YCharts

While Tesla (TSLA 3.99%) is the established leader in the sector with profits rolling in, Rivian Automotive (RIVN 2.94%) is closer to Lucid in its business lifecycle. But it may just be that with more and more options, investors putting money in EV names have to now make choices. And while Lucid stock has declined in the past five days, shares of Tesla and Rivian have revved up. 

Bronze Lucid Air in driveway of modern home.

Image source: Lucid Group.

Now what

Now, there are also explanations for why Tesla and Rivian stocks have moved higher recently. Tesla CEO Elon Musk finalized his stretch of stock sales, which may have marked a reversal in those shares. And Rivian stock is still benefiting from the recent excitement around its initial public offering, particularly when aggressive growth stocks are in favor. 

With the EV sector still so immature, all these names are rather speculative relative to their valuations. They will inevitably be volatile and often trade on more than just business fundamentals. Lucid stock, in fact, has risen over 40% in the last three months. 

Investors in the sector need to have a strong stomach. And not every trend in share prices will make sense. The most recent slide just may represent the evolution of the sector as new entrants begin shipping product. Investors may move in and out of the stocks trying to decide which will be the long-term winners. 

Howard Smith owns Lucid Group, Inc. The Motley Fool owns and recommends Tesla. The Motley Fool has a disclosure policy.

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