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Lucid Stock Ended an 8-Day Losing Streak Tuesday. Why It’s Falling Again.


Courtesy Lucid Motors

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Stock in electric vehicle startup

Lucid

has had a brutal time lately. Shares are falling again Wednesday despite some new product news. The recent stock price action has investors asking: What gives? And what can get the stock moving higher again?

Lucid (ticker: LCID) shares dropped for eight consecutive trading sessions coming into Tuesday trading. Tuesday ended the pain when shares rose 5.5%.

Investors might have hoped for another relief rally on Wednesday after the company announced plans to produce a performance version and long range version of its first product: the Lucid Air Dream Edition. It’s an ultra luxury car that will retail for about $170,000. More product configurations and options for buyers is usually good news for EV startups.

The performance version will offer the equivalent of 1,111 horsepower. That’s a lot and can take a rider from zero to 60 miles per hour in about 2 seconds. Barron’s has been in a Air Dream edition for a test drive. It wasn’t a performance model. Still, the acceleration is butterfly inducing.

The long range version will still offer 933 horse power, but should get more than 500 miles of range on a single charge.

Despite the news, shares are dropping, down 3.9% in late trading Wednesday. The

S&P 500

and

Dow Jones Industrial Average

are both up 0.3%. Since shares started the eight day spiral, the stock is off about 10%.

It’s hard for investors to blame something the company did or said. There hasn’t been a lot of news from the company.

Congress might be blamed. The slide started after the a Senate proposal to limit EV purchase tax credits to cars below $40,000 and for people with incomes below $100,000. That would mean no $7,000 or $10,000 tax rebate for buying an Air.

That proposal, however, isn’t binding. Senators can propose non-binding amendments as part of the budget reconciliation process.

Wall Street hasn’t helped. In fact, Wall Street hasn’t said anything. No analysts cover Lucid stock yet. The company recently completed its SPAC merger and it usually takes a couple weeks for analysts to pick up coverage.

Analyst coverage could be a catalyst for the stock–assuming Wall Street says Buy. There is no guarantee of that, but shares are off by some two-thirds from their all time high, making it a little more likely analysts launch with Buys. Valuation, after all, has come in significantly.

Lucid is still richly valued. Its market cap sits at about $35 billion based on 1.6 billion fully diluted shares outstanding.

Other SPAC-related EV stocks are weak in Wednesday trading. That’s another thing investors can blame. Shares of

Lordstown Motor

(RIDE),

Arrival

(ARVL) and

Fisker

(FSR), for instance, are down 3.1%, 3.5% and 1.4%, respectively.

Write to allen.root@dowjones.com