LCID shares could be beaten, but it is a long-term purchase

Lucid group (NASDAQ:LCID) shares continue to maintain positive growth in the last 12 months. It’s hard to believe given the unrest on stocks since we entered 2022.

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Of course, this is only a 7% return, but there are many electric vehicle (EV) stocks that are not so lucky.

Some of this constant strength is the fact that the company has not made the mistakes that many new electric vehicle manufacturers stumble upon.

You have “oh, by the way, we’ll charge you $ 15,000 more for your car”, Rivian (NASDAQ:RIVN) surprised hopeful waiting with the last week. Also the next wave of threats posed by many Chinese stocks will be deleted from US stock exchanges – potentially NIO (NYSE:NIO) – if they do not comply with US conditions.

In fact, setting up a breakthrough EV car company has many more hurdles than many expected. This applies to everyone, both investors and founders.

forehead Tesla (NASDAQ:TSLA) has lost 21% to date. If this turns into a complete sale, it can deal with a lot of luggage.

While, for example, it still depletes only about 1 million cars a year, large car companies are now starting to introduce their EV lines and many of them are gaining a lot of praise. This means competition from below and above for the TSLA. As soon as his market share hits, he could become ugly.

The LCID stock remains attractive

LCID’s stock remained at its lowest level as it produced a luxury car that garnered praise from the industry for its build quality and a range of 500 miles.

Remember that LCID uses a strategy to move into space with a high-end car that can be built in limited quantities to show proof of concept. Then you start building the rest of the line as you have the money to measure.

The advantage that LCID also has is $ 3.4 billion from the Royal Public Investment Fund. While introducing cars to the US, it is too just announced plans to build a large facility in Saudi Arabia with the help of the Kingdom government. Few other electric vehicle manufacturers can boast such long-term support.

Of course, LCID has also found itself on a few bumps on the road, as all startups do when they drop their product into the wild.

First, he had a problem with the front strut demanded a recall February on more than 200 cars. LCID shares then posted earnings that were lower than expected.

The message is also that cutting production and delivery prospects for this year. This has hit stocks, especially now that the entire market is very sensitive to bad news.

EV is a long-term investment

The problem in the stunning days of this long-running market boom is that many investors forget about risk, as everything usually grows when people shout, “buy a drop!”

But there is another proverb about these markets. Everyone is a genius in the bull market.

Individual investors are getting a taste for this old saw right now.

Also keep in mind that LCID has a lot of short-term interest, which means there are still some big bets that the stock will continue to fall. It is also an indicator of how investors feel about any electric vehicle manufacturer that is not currently a TSLA.

Car companies do not yet qualify as electric vehicle manufacturers and inherited measurements from car companies will still be taken into account. That will not change any time soon.

But what will change is the fact that gas prices exceed $ 4 a gallon and go up before we get relief. This will take EVs into this new, new normal state.

At the date of publication, GS Early did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are the subject of InvestorPlace.com Guidelines for publication.

GS Early has been an award-winning financial writer and editor for nearly three decades, having worked with many leading financial editors during that time. He saw a few things and heard more.