At times, it seems Lucid Group (LCID +6.24%) just can't catch a break lately. Contending with a general slowdown in sales growth for electric vehicles (EV), the luxury vehicle's share price dove to all-time lows earlier this month following news of a recall.
Although the share price didn't hit a new floor on Thursday, it did erode by almost 6% on the day. To be fair, this was hardly the company's own fault.
A famous peer sputtered
While not everything good or bad in the EV industry flows from segment powerhouse Tesla (TSLA +2.71%), what happens with the standard-bearer often sets the tone for EV stocks as a whole.
That's why a clutch of them took body blows to their stock prices Thursday. Tesla delivered a major update, and it wasn't so encouraging.
Specifically, it published its fourth-quarter results following market close the day before. The numbers didn't impress investors, particularly in light of the company's lavish valuations. Revenue, for instance, only inched up by 3% year over year, while non-GAAP (adjusted) earnings per share fell by a vertigo-inducing 40%. Both line items missed the average estimates culled from the many analysts tracking the stock.
Lucid isn't Tesla, and it isn't necessarily fair that the smaller company should be sold off mostly by association. Yet there are enough similarities between the two -- Lucid focuses on luxury models not entirely dissimilar to Tesla's pricier offerings -- for investors to worry about its future too. Compounding this, Lucid is significantly less well capitalized, and its product lineup isn't as diverse.
NASDAQ: LCID
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Risk-adverse investors need not apply
I don't think investors should give up on Lucid, necessarily, but this is a stock only for those with notable appetite for risk.
Its EVs have been well received and are certainly attractive to a limited yet well-heeled segment of the population. On the downside, the company is far from proving that it can sell such wares profitably and consistently, particularly when consumers seem to be getting over their excitement about EVs. Caution is very much warranted with Lucid stock these days.
