24/7 Wall St. Insights
- Tesla Inc. (NASDAQ: TSLA) stock saw a post-election surge, but shares of smaller rival Lucid Group Inc. (NASDAQ: LCID) retreated.
- Investors seem to think Lucid will be more of a victim if tax credits for EV buyers are eliminated.
- Also: Dividend legends to hold forever.
The Tesla Inc. (NASDAQ: TSLA) share price rose by a double-digit percentage after Trump’s election victory. The primary impetus for that appeared to be the close relationship between Tesla CEO Elon Musk and the president-elect. However, it is unclear whether the new president might end up with policies that favor America’s largest electric vehicle (EV) maker. In a period in which EV sales in the United States have slowed, Tesla’s gain would create victims of the smaller companies competing with it, each battling for market share in a stagnant industry.
The day after the election, Tesla’s stock was up almost 20%, and the share price of Lucid Group Inc. (NASDAQ: LCID) retreated by as much as 8%. It recovered somewhat the next day but is still down 47% for the year. Tesla’s surge put it up almost 20% and the S&P 500 is up 24% over the same period. At just above $2 a share, Lucid is considered a penny stock by most definitions.
Lucid cannot afford Tesla to have an edge beyond its much larger company’s unit sales and revenue, and the market share it already has.
Lucid’s revenue rose 45% in the third quarter, compared to last year, but only to $200 million. It lost $932 million, compared to a loss of $631 million in the same quarter a year ago. And, disappointingly, it delivered only 2,781 vehicles.
The theory is that the new president will cut tax credits for EV buyers. On paper, that should also hurt Tesla, but investors do not think so. It appears that investors think Lucid will be a victim.
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