LCID Stock Deserves Time and Patience, but Not Too Much

About a week into trading under its new ticker, there isn’t much happening with Lucid Motors (NASDAQ:LCID) stock.

Source: ggTravelDiary / Shutterstock.com

Normally, the absence of news is neutral, at best, for a stock. However, in this case, I find it to be a good sign for those who are considering an investment in LCID stock.  

Lucid Motors is one of the most well-capitalized electric vehicle (EV) companies to hit the market. The problem is that they’ve come to market when the market has a healthy dose of EV and SPAC fatigue.

Lucid, as you know, was taken public via a reverse merger with Churchill Capital.  

I wrote about LCID stock shortly after Lucid and Churchill Capital completed their reverse merger. Because the stock had only been trading a couple of days, I refrained from reading too much into the charts.

With that in mind, I said the stock reminded me of a professional sports league’s draft pick.  

Lucid has been promoted as a “can’t miss” stock. Like the glowing scouting reports given to highly touted college athletes, Lucid bulls refer to the company as a significant rival to Tesla (NASDAQ:TSLA).

They may be right, but like the draft pick the company has to deliver.  

Get It Right, Not Fast 

The immediate agenda item that Lucid Motors must complete is the start of production on the Lucid Air, its introductory sedan.

The company has built a production facility in Arizona and says it is still on track to begin production in the second half of 2021. 

This is one of those times when I believe it’s much better to be right than be fast. Lucid does not want to get off on the wrong foot with investors. 

At this point, Lucid has said it is on track, but they haven’t committed to a date. For now, that’s fine. 

However, it’s also important that it delivers on the features it has teased. Namely, a 500-mile range, as much as 1,000 horsepower (depending on the model) and fast charging times.

The sleek design already holds appeal. Now it’s time for the company to show that it’s bringing something truly distinct to market.  

The EV space is still shaking out. It seemed like nearly every week in 2020 there was another EV company going public.

For a time there were enough speculative dollars to chase that supply, but investors are getting more selective. The determining factor will be if the companies can live up to their promises. Those that do, are likely to go higher. 

Is LCID Stock a Buy? 

It’s hard to give the green light to any single EV company. If you’re a risk-averse investor, you might consider the KraneShares Electric Vehicles & Future Mobility Index ETF (NYSEARCA:KARS).

Unlike some ETFs that focus on the underlying technology in the EV sector, KARS is more of a pure-play on electric vehicles. 

But what’s the fun in that, right? And Ian Bezek raised the interesting point that Lucid Motors could pick up shares from Tesla

Certainly Tesla has its true believers who aren’t going anywhere. However, TSLA stock has been propped up by more than a little FOMO, and a lot of that came from a feeling that there simply were no better growth options.  

Tesla stock recently formed a bearish death cross when its 50-day simple moving average crossed below its 200-day SMA. A quick look at the Tesla chart shows that this event may be short-lived, but if investors believe they may have a chance to ride LCID stock significantly higher.  

At the same time, LCID stock appears to be forming a base of support at around $23 a share. 

Still, if I’m a trader, I’m not sure that there’s a great setup at the moment. If you’ve read my articles before, I fall clearly in the investor camp.

With that said, as a small, speculative position there’s a lot to like with a small position in LCID stock. If the company starts to hit those milestones, you can add more shares at that time.  

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019. 

View more information: https://investorplace.com/2021/08/lcid-stock-requires-patience-from-company-and-investors/

View more information: Finance
See also  SKLZ Stock Needs Time to Gather Investor Kudos Points

Leave a Reply

Back to top button