Shares of EV stocks such as Lucid Motors and Rivian are trading at a much lower multiple due to the sell-off in the equity market.
The first six months of 2022 have been excruciating for equity investors. Several growth stocks across multiple sectors have lost significant momentum due to various macroeconomic factors.
For example, shares of electric vehicle (EV) companies such as Lucid Motors (NASDAQ: LCID) and Rivian (NASDAQ: RIVN) are down 68% and 84% respectively from all-time highs. In addition to sky-high valuations, EV stocks are wrestling with supply chain disruptions, rising input prices, an uptick in interest rates, and the threat of an economic recession.
Despite the ongoing meltdown in 2022, the long-term prospects for EV stocks, including Lucid Motors and Rivian, are compelling. The global shift towards clean energy solutions should act as the key catalyst for electric vehicle manufacturers in the upcoming decade. Keeping these factors in mind, let's see which EV stock is a better buy between Lucid Motors and Rivian right now.
Is Lucid stock a buy in 2022?
Valued at a market cap of almost $30 billion, Lucid Motors delivered 306 vehicles in Q1 of 2022, reporting revenue of $57.7 million. Lucid Motors stated that it continues to enjoy strong customer demand for the Lucid Air, as reservations have exceeded 30,000 units as of May 5, reflecting potential sales of almost $3 billion.
In addition to customer reservations, LCID has signed a deal with Saudi Arabia to deliver 100,000 vehicles in the next ten years.
The company expects to deliver between 12,000 and 14,000 vehicles in 2022, while analysts expect sales to rise to $1.38 billion this year. Given consensus estimates, Lucid's revenue might more than double to $3.46 billion in 2023.
Lucid Motors ended Q1 with a cash balance of $5.4 billion which should fund the company well into 2023. In addition to the Lucid Air, the company began deliveries of the Lucid Air Grand Touring in Q2 -- a vehicle with an estimated driving range of 516 miles on a single charge.
During its earnings call, Lucid Motors emphasized that the world has changed radically since it first announced prices for the Lucid Air in September 2020. While it will honor its current pricing for existing reservation holders, vehicle prices have increased this month to accommodate rising commodity costs.
Should Rivian stock be part of your portfolio?
Rivian's market cap stands at $23.8 billion despite the drawdown in share prices this year. In the last 12 months, Rivian has launched its flagship vehicles such as the R1T, R1S, and EDV. The company went public in Q4 of 2021 after raising $13.7 billion in gross proceeds via an initial public offering. Rivian ended Q1 with a cash balance of $17 billion, which is enough to support its cash burn for the next three years at current rates.
Rivian's production plant in Illinois has an annual capacity of 150,000 units, allowing the company to ramp up manufacturing capabilities at a steady pace. Backed by heavyweights such as Ford and Amazon, Rivian will have access to liquidity capital in case it chooses to accelerate production numbers. Amazon has also pre-ordered 100,000 electric-powered pick-up trucks from Rivian, which will be delivered by 2030.
As of May 9, Rivian has manufactured around 5,000 vehicles and expects to produce 25,000 vehicles by the end of 2022. Its sales are forecast to touch $1.83 billion in 2022 and $6.46 billion in 2023, making it one of the top growth stocks in the EV space.
The bottom line
The two companies will have to wade through supply chain complexities while focusing on expanding their workforces Both Rivian and Lucid have enough cash on hand to navigate an uncertain macro-environment and extended period of negative cash flows.
LCID stock is valued at a forward price to 2023 sales multiple of 8.7x, while this ratio for Rivian stands at 3.7x. Due to its higher estimated growth rates, stronger liquidity position, and lower valuation, Rivian seems a better buy than Lucid stock right now.
