Business & Investment

Stocks in Rivian and Lucido plunged.This is what I am doing now

The stock price of electric vehicles (EVs) underperformed in 2022. Rivian (NASDAQ: RIVN) When Lucido (NASDAQ: LCID).. Both of these inventories have fallen by more than 25% year-to-date.

Personally, I’m not surprised at the poor performance in this market area.One of my 2022 Stock Market Forecast Small EV stocks had poor performance. But did the recent weaknesses of the EV sector as a whole offer me a buying opportunity? Let’s take a look.

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What’s next for Rivian and Lucido?

EV stocks like Rivian and Lucido have all bounced back a bit lately, but I think the downside risk remains.

For starters, even after the January drop, the ratings are still pretty high. Currently, these companies have market capitalizations of $ 63 billion and $ 46 billion, respectively. On the other hand, the future-looking price-to-sales ratios for these companies are 18 and 21. Given that both EV companies produce only a few vehicles, I think these numbers are very high. If they are suffering from operational challenges (such as a shortage of semiconductors), their stock price can be severely hit.

Second, both of these companies are currently making big losses and aren’t expected to make a profit for years. In 2022, analysts expect Rivian to record a net loss of $ 4.7 billion and Lucido to record a net loss of $ 1.7 billion. Recently, the fact that the US Federal Reserve is in a tightening cycle has really exacerbated the desire for stocks of unprofitable companies. I think feelings about this kind of stock can get worse before it gets better.

Look for shortsellers

Finally, both of these EV stocks currently have very high levels of short selling. This shows that hedge funds and other sophisticated investors are betting on lower stock prices. Currently, Rivian’s short sales are about 23% and Lucido’s short sales are about 20%. I tend to consider short-selling numbers above 5% as a red flag. This is because many short sales indicate that they are downbeat against stocks. And that’s not a good thing. Shortsellers tend to do research.

Of course, shortsellers are not always right. But last year it was certainly successful with small EV stocks. Nicola, Hard workerWhen XL Fleet These are just a few of the EV stocks they are targeting. Last year everything was down more than 70%.

Better stock to buy

It should be pointed out that both Rivian and Lucido are exciting companies with excellent products. As EVs become mainstream, these companies expect to generate strong sales growth over the next few years.Both have the potential to gain market share from industry leaders Tesla..

However, in my opinion, neither EV stock offers a favorable risk / reward proposal at this time. So currently they are not on my “best stocks to buy” list.

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Edward Sheldon There are no positions in any of the above stocks. Motley Fool UK recommends Tesla. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, given the various insights, A better investor than us.

Stocks in Rivian and Lucido plunged.This is what I am doing now Stocks in Rivian and Lucido plunged.This is what I am doing now

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