Rivian automotive's share price is far below what it was when it first went public in 2011. The price drops may be good news for investors who are interested in buying an electric vehicle.
Only one of the companies is looking like a good long-term investment at the moment. Let's take a closer look at each one to see which one is better.
The image is from Rivian.
Customers and car enthusiasts alike are interested in the impressive EV created by Lucid. The company produced 2 vehicles in the third quarter, nearly double the amount from a year ago.
While the company is increasing sales, it is also experiencing setbacks. The company cut its guidance in half after running into supply chain issues, and originally planned to make up to 14,000 vehicles this year. The company seems to be losing steam among potential customers, as reservations fell 8% in the most recent quarter.
EV companies have had some supply chain issues recently, but the problem is that the company is also burning cash at a rapid pace. The company had a net loss of $670 million in the third quarter, compared to a loss of $524 million in the same quarter a year ago.
The company had to raise more money through a combination of private and public offerings. At the end of the quarter, the company had almost $4 billion in cash. Having more cash on hand is a good thing, but the fact that Lucid needs more cash so soon after going public should worry investors.
Even though the company's share price has plummeted over the last year, its shares are still expensive. The P/S ratio for Lucid is 29 compared to 5.8 forTesla.
Rivian is an EV start-up that is trying to find its footing in the market. The EV maker is spending a lot of money to keep up with demand. Rivian lost more money in the third quarter than it did in the year-ago quarter.
Rivian may be in a better position than Lucid due to a few things. Rivian has more cash and is able to fund its operations through at least 2025. Rivian's vehicle production more than tripled from Q2 to Q3 and totaled 7,362 vehicles.
The fact that Rivian started delivering electric vans to Amazon proves that the company is able to manage new production. Rivian has an order from Amazon of 100,000 vehicles, and the company has said that it will be finished by 2030. At the end of the third quarter, the company had 114,000 preorders, compared to 98,000 in the second quarter.
Rivian's shares have a P/S ratio of 16 They are cheaper than the P/S ratio.
With Rivian increasing production and reservations, starting deliveries of its vans to Amazon, having more cash on hand for funding its operations, and trading for less than Lucid's stock, I think Rivian is the better buy.
The EV industry is volatile right now and investors need to be aware of that.
If you're buying Rivian or any other EV stock right now, you will have to be patient as EV companies navigate a difficult economic time.
The CEO of Whole Foods Market is on the board of directors. Chris Neiger has no position in any of them. There are positions in and recommendations for Amazon.com. There's a disclosure policy at the Motley Fool.
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