With the increasing transition towards low emission vehicles, as well as government subsidies for electric vehicle (EV) buyers, the global EV market is estimated to hit $802.81 billion by 2027, expanding at a CAGR of 22.6% during the forecast period.
However, year-to-date (YTD), the EV industry has been losing some ground, as evidenced by the Global X Autonomous & Electric Vehicles ETF (DRIV) 6% loss.
In today’s article, I intend to analyze and compare two beaten-down EV stocks, Rivian Automotive, Inc. (RIVN) and Lucid Group, Inc. (LCID), to determine which one is currently the better investment.
Founded in 2009, RIVN develops and manufactures electric pickup trucks and sports utility vehicles. The company became public through a traditional IPO on November 10th, 2021, selling 153 million shares at $78.00 per share. Lucid Group is a California-based company that produces and sells electric vehicles, EV powertrains, and battery systems in the U.S.
YTD, shares of Rivian Automotive plunged about 38%, and LCID stock lost around 26%, underperforming its benchmark DRIV.
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Recent Developments
On February 14th, hedge funds revealed their 13F filing. Consequently, George Soros's Soros Fund Management took new positions in Rivian, which equals 19.8 million shares. At the same time, Tudor Investment opened new positions in Rivian with 233,113 shares.
Recent Financial Performance & Analysts Estimates
On December 16th, Rivian Automotive posted its first earnings report as a public company. In Q3, the company's total revenue has been reported at $1 million, slightly missing consensus by $0.03 million. This revenue figure was achieved due to the first customer deliveries of 11 electric trucks, known as R1T. When it comes to expenditures, Rivian's third-quarter total operating expenses were up 141% year-over-year to $694 million due to a 100% increase in research and development expenses and 272% increase in selling, general, and administrative costs. As a result, the company revealed GAAP EPS of ($12.21), missing consensus by $5.53.
It is also important to note that the company had 71,000 preorders for its R1 vehicle as of December 15th. Rivian said that it had produced 652 R1 vehicles through December 15th, shipping 386 R1 EVs to clients. Moreover, the company plans to build another manufacturing plant this summer with an expected annual capacity of 400,000 vehicles. Finally, RIVN ended the quarter with $5.2 billion cash on hand.
For the fourth quarter, analysts expect RIVN's EPS to be ($1.61). Besides, analysts forecast that its Q4 revenue should climb to $60.09 million.
Lucid Group last issued its earnings results on Monday, November 15th. In Q3, Lucid Group's total revenue decelerated 31% on a year-over-year basis to $232,000, missing Wall Street estimates by $1.02 million. The revenue decrease was related to lower sales of battery pack systems and supplies for vehicles. Its third-quarter net loss advanced 225% year-over-year to $524.4 million, leading to lower-than-expected GAAP EPS of ($0.43).
On the positive front, the company's liquidity in the third quarter was significantly improved amid the closing of the de-SPAC reverse merger + PIPE, allowing LCID to recognize $4.4 billion of cash on the balance. Furthermore, Lucid Group has more than 13,000 preorders for its EV, with over $1.3 billion in expected bookings.
For the current quarter, analysts project Lucid’s earnings to come in at ($0.30) per share. Its revenue for the fourth quarter of 2021 is expected to stand at $59.87 million.
Comparing Options Market Sentiment
Looking at the March 18th, 2022 option chain for both RIVN and LCID, we can determine options market sentiment by comparing the calls/puts ratio. In RIVN's instance, the open calls/open puts ratio at the $75.00 strike price comes in at 4.12x, implying a strong bullish options market sentiment. When it comes to LCID, the open calls/open puts ratio at the $30.00 strike price stands at 0.12x, showing a bearish market sentiment.
The Bottom Line
I believe that RIVN is a better investment than LCID at the moment. It is essential to highlight that institutional investors have increased their stakes in Rivian, emphasizing confidence in the company's long-term growth prospects and commercial success. Rivian's financials also look relatively better, especially considering the number of vehicle pre orders. Finally, Rivian has a bullish medium-term options market sentiment.
RIVN shares were trading at $63.96 per share on Wednesday morning, down $2.33 (-3.51%). Year-to-date, RIVN has declined -38.32%, versus a -6.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.
Rivian vs. Lucid: Which Beaten-Down EV Stock is a Better Buy? StockNews.com
