EV Stocks Get a Boost, But Is Lucid Stock a Buy?

Stock Market

The entire EV market is getting a boost today. From Rivian (NASDAQ:RIVN) to Tesla (NASDAQ:TSLA) to Lucid (NASDAQ:LCID), risk-on sentiment finally appears to be taking hold this Friday. Among the major electric vehicle (EV) makers that are seeing impressive increases, Lucid is a leader. On Friday, LCID stock soared more than 16% around noon EST as investors returned to buying these growth stocks heavily.

The major catalyst spurring this activity appears to be the view that interest rates won’t rise as fast as expected. Federal Reserve Chairman Jerome Powell reiterated on Thursday the plan to move 50 basis points over the next two meetings. Accordingly, the market is bullish on Lucid right now.

That said, I remain skeptical of this company’s growth potential relative to the EV market. Lucid’s end product is cool, but ultimately deliveries matter more than anything. Let’s discuss whether now may be time to buy the dip, or sell the rip on LCID stock.

Time to Load Up On LCID Stock Amid Impressive Rally?

It’s important to put this late-week rally into perspective. Heading into the company’s earnings call on May 5, investors were paying around $20 per share for this EV maker. Shares of LCID dropped below $14 per share after reporting what many viewed as a negative release.

While the company did report that reservations increased to 30,000, it also raised prices for its EVs. Sure, inflation is real and passing costs onto consumers is part of the deal. However, investors didn’t seem to like what this move might mean for future growth.

I tend to agree with this view. While EV stocks may be heating up again, Lucid is a difficult one for me to wrap my head around in terms of valuation. Perhaps the high-end consumer is less price sensitive and will pay whatever it takes to get the best in terms of quality. However, in what could be an upcoming recession, there simply may be fewer buyers at such a high price point.

In this environment, I think most EV stocks are overpriced relative to their backward-looking numbers. For Lucid, which is just getting off the ground, it may be a difficult road ahead. Accordingly, I’m on the sidelines with this one.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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