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Lucid Group: A Promising Growth Stock… or Another EV Flop?

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A reader recently requested that I run luxury electric vehicle (EV) manufacturer Lucid Group (Nasdaq: LCID) through The Value Meter.

Lucid is far from the first EV company I’ve looked at.

And to say that I have not been bullish on EV stocks is a monumental understatement!

To date, every single time I’ve evaluated an EV company, I have advised readers to stay far away.

Back in June 2020, Nikola Corp. (Nasdaq: NKLA) came into my crosshairs.

I concluded that the company was absurdly overvalued.

The market quickly agreed with me, and Nikola’s stock has since dropped a stunning 96%.

Chart: Nikola Stock Has Fallen off a Cliff

Then, in October 2021, I examined Rivian Automotive (Nasdaq: RIVN) and again came to a bearish conclusion.

Rivian’s stock soon plummeted and is now down more than 80%.

Chart: Rivian Down 80% in Just 2 Years

More recently, just over a month ago, I put VinFast Auto (Nasdaq: VFS) through The Value Meter.

Yet again I concluded that the stock was significantly overvalued…

And the share price of VinFast has already dropped by more than half!

Chart: VinFast Auto Dropped Over 50% in a Month

But what about shares of Lucid Group? Have we finally found an EV stock that presents a good value for investors?

My quick answer is, unfortunately, no.

Like every other EV company I have profiled, Lucid Group has a very large market valuation… but zero profits!

Despite a steady drop in its stock price over the past six months, Lucid still sports an enterprise value of more than $8 billion.

Chart: Lucid Group

To me, that seems like an incredibly rich valuation for a company that has posted enormous losses of $706 million, $4.7 billion and $2.6 billion over the past three years.

And guess what… Over the first six months of 2023, Lucid again lost money. So far this year, this highly valued EV maker has lost another $1.5 billion.

Now, I understand that Lucid is considered a high-growth stock.

And growth stocks sometimes turn out to be wonderful investments after failing to make any money in their early years.

But the problem that I have with Lucid is the same one I’ve had with the other EV manufacturers I’ve analyzed: I don’t have any conviction that it will ever grow enough to become profitable.

The reality is EV manufacturing is going to be an incredibly competitive business going forward, and these young EV pure plays will be competing with legacy car manufacturers that have much deeper pockets.

Some growth stocks can be great value investments, but I don’t see that being the case with Lucid Group.

Buying shares of this company at its current valuation is merely speculation.

Due to Lucid Group’s large market valuation and the huge losses it’s taking, The Value Meter rates this stock as being “Extremely Overvalued.”

The Value Meter

If you have a stock that you’d like to have rated by The Value Meter, leave the ticker symbol in the comments section below.

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