What happened
Growth and technology stocks are leading the markets lower this week, and electric vehicle (EV) names like Lucid Group (LCID -0.62%) are part of the reason why. The tech-stock-filled Nasdaq Composite index was down almost 2% for the week as of late Thursday trading, while Lucid shares were lower by about 13%, according to data provided by S&P Global Market Intelligence.
So what
While Lucid has been underperforming the index this week, both are lower for some of the same reasons. Lucid's drop comes after it reported third-quarter earnings late last week, and investors focused on one metric that was taken as an ominous sign.
The stock dropped after that report, but continued to fall this week on more macroeconomic news. Despite signs that the rate of inflation has been easing, members of the Federal Reserve have remained hawkish this week, saying that it is still too soon to expect interest rate hikes to stop.
Image source: Lucid Group.
Now what
In its earnings release, Lucid revealed that its backlog of reservations had dropped during the third quarter. That's an important metric for many EV start-ups, but Lucid is a special case with its ultra-high-cost luxury sedans. Lucid delivered almost 1,400 vehicles in the third quarter at an average sales price of nearly $140,000. That's a small consumer market base, so it's not overly surprising that some might turn to competitors that are entering the luxury EV market rather than wait a year or more for a Lucid.
More importantly for Lucid investors might be the news that accompanied earnings that Lucid is raising another $1.5 billion to help move its business forward. With it looking likely that interest rates will continue to rise, raising capital could become more and more costly for Lucid. That seems to be driving the double-digit decline in shares this week.
