What happened
The Nasdaq Composite Index is leading the market down again today, reflecting carnage in the growth and technology sector. But electric vehicle (EV) stocks like Lucid Group (LCID -1.80%) are significantly further to the downside. Lucid shares are extending a 31% five-day drop today with a decline of 12.6% as of 3:08 p.m. ET.
So what
Lucid released its first-quarter report last week, and shares are now down 31% since that report. The results didn't show any big surprises that would lead investors to bail out of the stock. But the status quo isn't quite enough right now as the market revalues many fast-growing young companies in the EV sector.
The Lucid Air EV. Image source: Lucid Group.
That seems to be what is happening with Lucid as it still sits with a market cap of $23 billion. That doesn't quite jibe for investors right now with first-quarter revenue of just $57.7 million.
Now what
Nothing has changed with Lucid recently, though. The change is what valuation investors are willing to give to a higher-risk start-up like Lucid.
The company kept its 2022 production guidance in place when it reported last week. And its more than 30,000 vehicle reservations would bring in revenue of nearly $3 billion if they become finalized sales.
Prior to this correction, Lucid was trading on its potential. But now, investors aren't willing to give it, or many other EV makers, the benefit of the doubt. Until those sales become a reality, it's unlikely that Lucid shares will soar again. That shouldn't bother long-term investors, though, as a long time horizon was always the plan.
