The diverging fortunes of the two most prominent electric vehicle start-ups in the US show Wall Street is picking a side – and it’s not Lucid Group.
Having recently touched an all-time low, the stock is down nearly 25 per cent this year through Thursday’s close, compared to a 1 per cent decline for pickup truck-making peer Rivian Automotive in the same period.
The percentage of bullish analyst ratings on Lucid has dwindled to only about a quarter of all recommendations. For Rivian, more than half of the ratings are the equivalent of a buy.
The performances reflect deeper differences. Lucid, which according to a Bloomberg Intelligence estimate is set to burn $338,000 for every vehicle it makes this year, said in August that it still expected to produce at least 10,000 cars in 2023.
Analysts’ average 2023 sales estimate for the firm has sunk nearly 50 per cent over the past six months.
In comparison, Rivian, which is estimated to lose about $110,000 per vehicle according to Bloomberg Intelligence, forecast full-year production of 52,000 units on Monday, and the average expectation for its 2023 sales has risen about 5 per cent.
“Lucid is well below the pace needed to hit even 10,000 cars this years, and that’s why they continue to bleed money,” Jerry Braakman, chief investment officer at First American Trust, said in an interview.
“The stock will continue to be challenged until they can show that they have made a significant progress in the number of units sold.”
Car making is a notoriously capital-intensive process. Which is why Lucid and Rivian’s deep-pocketed backers – Saudi Arabia’s Public Investment Fund for Lucid and Amazon for Rivian – helped them command premium valuations that they still enjoy over other upstarts.
But that only goes so far at a time when markets are grappling with the prospect of higher-for-longer interest rates and tighter liquidity. Rivian shares slumped 23 per cent on Thursday after the company said it planned to issue $1.5 billion in convertible debt.
Lucid had tapped the capital markets for cash earlier this year, securing an infusion from the Saudi fund, a move that typically does not sit well with shareholders.
“It dilutes the stock, so from a common investor’s standpoint that is a tough space to be in,” Mr Braakman added.
The company is currently in a quiet period ahead of its third-quarter earnings report, and did not comment for the story. The stock dropped as much as 2.3 per cent on Friday, while Rivian fell 3.4 per cent, after a hotter-than-expected US jobs report sparked a market-wide sell-off.
Once seen as the most credible competitors to Tesla, Lucid and Rivian entered public markets in mid-to-late 2021, when market enthusiasm for new EV-makers was high. Their valuations soared before the tables rapidly turned in 2022 as traders veered from riskier growth investments. Lucid is down 91 per cent from its peak, while Rivian has lost 89 per cent.
Severe supply-chain shortages and surging prices of battery raw materials plagued them further, but troubles have stuck with Lucid this year. The company has struggled to ramp up sales, selling around 1,400 units in both the first and second quarter. For the third quarter, it is estimated to have sold about 2,100 cars. Rivian’s sales, on the other hand, have significantly grown every quarter so far this year.
The risk that Lucid may default on its debt payments is also climbing.
According to Bloomberg Intelligence credit analyst Joel Levington, the company’s default risk is now at 16 per cent, almost four times the median for global automotive manufacturers.
“Lucid’s near-term strength is its cash balance of $5.2 billion, but its cash burn of almost $7 billion through 2024 tempers views,” Mr Levington wrote in a note on Wednesday.
At the same time, the firm is trying to find a foothold in a market where Tesla already rules. The company makes a luxury electric sedan that competes with Tesla’s Model S, along with several new models rolled out by more established global carmakers such as Mercedes-Benz Group, BMW, and Volkswagen’s Porsche and Audi brands.
“The problem lies with how Lucid positioned itself – going after a luxury, smaller volume market, while Rivian is targeting a bigger addressable market,” said Tom Narayan, an analyst with RBC Capital Markets.
That said, Mr Narayan noted that “Rivian isn’t out of the woods either, though it is now in a better place compared to Lucid.”
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Company Profile:
Name: The Protein Bakeshop
Date of start: 2013
Founders: Rashi Chowdhary and Saad Umerani
Based: Dubai
Size, number of employees: 12
Funding/investors: $400,000 (2018)
FIXTURES
Monday, January 28
Iran v Japan, Hazza bin Zayed Stadium (6pm)
Tuesday, January 29
UAEv Qatar, Mohamed Bin Zayed Stadium (6pm)
Friday, February 1
Final, Zayed Sports City Stadium (6pm)
Tailors and retailers miss out on back-to-school rush
Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”
A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.
“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”
FORSPOKEN
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Star%20Wars%20Jedi%3A%20Survivor
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Final%20Fantasy%20XVI
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Street%20Fighter%206
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Diablo%20IV
%3Cp%3EDeveloper%3A%20Blizzard%20Entertainment%0D%3Cbr%3EPublisher%3A%20Blizzard%20Entertainment%0D%3Cbr%3EConsole%3A%20PC%2C%20PS5%2C%20XSX%0D%3Cbr%3ERelease%20date%3A%20June%3C%2Fp%3E%0A
Baldur's%20Gate%203
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The%20Legend%20of%20Zelda%3A%20Tears%20of%20The%20Kingdom
%3Cp%3EDeveloper%3A%20Nintendo%0D%3Cbr%3EPublisher%3A%20Nintendo%0D%3Cbr%3EConsole%3A%20Nintendo%20Switch%0D%3Cbr%3ERelease%20date%3A%20September%3C%2Fp%3E%0A
Marvel's%20Spider-Man%202
%3Cp%3EDeveloper%3A%20Insomniac%20Games%0D%3Cbr%3EPublisher%3A%20PlayStation%0D%3Cbr%3EConsole%3A%20PS5%0D%3Cbr%3ERelease%20date%3A%20Fall%3C%2Fp%3E%0A
Assassin's%20Creed%20Mirage
%3Cp%3EDeveloper%3A%20Ubisoft%0D%3Cbr%3EPublisher%3A%20Ubisoft%0D%3Cbr%3EConsole%3A%20PC%2C%20PS5%2C%20XSX%2C%20Amazon%20Luna%0D%3Cbr%3ERelease%20date%3A%202023%3C%2Fp%3E%0A
Starfield
%3Cp%3EDeveloper%3A%20Bethesda%20Game%20Studios%0D%3Cbr%3EPublisher%3A%20Bethesda%20Softworks%0D%3Cbr%3EConsole%3A%20PC%2C%20Xbox%0D%3Cbr%3ERelease%20date%3A%202023%3C%2Fp%3E%0A
Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
MADAME%20WEB
%3Cp%3EDirector%3A%20S.J.%20Clarkson%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Dakota%20Johnson%2C%20Tahar%20Rahim%2C%20Sydney%20Sweeney%3C%2Fp%3E%0A%3Cp%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
Second ODI
England 322-7 (50 ovs)
India 236 (50 ovs)
England win by 86 runs
Next match: Tuesday, July 17, Headingley
The biog
Favourite hobby: I love to sing but I don’t get to sing as much nowadays sadly.
Favourite book: Anything by Sidney Sheldon.
Favourite movie: The Exorcist 2. It is a big thing in our family to sit around together and watch horror movies, I love watching them.
Favourite holiday destination: The favourite place I have been to is Florence, it is a beautiful city. My dream though has always been to visit Cyprus, I really want to go there.
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
The Equaliser 2
Director Antoine Fuqua
Starring: Denzel Washington, Bill Pullman, Melissa Leo, Ashton Sanders
Three stars
Biography
Favourite book: Zen and the Art of Motorcycle Maintenance
Holiday choice: Anything Disney-related
Proudest achievement: Receiving a presidential award for foreign services.
Family: Wife and three children.
Like motto: You always get what you ask for, the universe listens.
Asia Cup 2018 final
Who: India v Bangladesh
When: Friday, 3.30pm, Dubai International Stadium
Watch: Live on OSN Cricket HD
KILLING OF QASSEM SULEIMANI
Favourite book: ‘The Art of Learning’ by Josh Waitzkin
Favourite film: Marvel movies
Favourite parkour spot in Dubai: Residence towers in Jumeirah Beach Residence
Ovo's tips to find extra heat
- Open your curtains when it’s sunny
- Keep your oven open after cooking
- Have a cuddle with pets and loved ones to help stay cosy
- Eat ginger but avoid chilli as it makes you sweat
- Put on extra layers
- Do a few star jumps
- Avoid alcohol
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Brief scores:
Southampton 2
Armstrong 13', Soares 20'
Manchester United 2
Lukaku 33', Herrera 39'
EA Sports FC 25
Developer: EA Vancouver, EA Romania
Publisher: EA Sports
Consoles: Nintendo Switch, PlayStation 4&5, Xbox One and Xbox Series X/S
Rating: 3.5/5
More on Palestine-Israeli relations
THE DETAILS
Solo: A Star Wars Story
Dir: Ron Howard
Starring: Alden Ehrenreich, Emilia Clarke, Woody Harrelson
3/5
MATCH INFO
Day 2 at the Gabba
Australia 312-1
Warner 151 not out, Burns 97, Labuschagne 55 not out
Pakistan 240
Shafiq 76, Starc 4-52
