The electric vehicle (EV) industry is a fast-growing industry, amid the world's transition towards low emission vehicles. According to Allied Market Research, the global EV market is projected to grow at a CAGR of 22.6% over the next five years, reaching $802.81 billion in 2027.
Year-to-date (YTD), the EV industry as a whole, is outperforming the market, as evidenced by the Global X Autonomous & Electric Vehicles ETF (DRIV) 27.6% gains, compared to SPDR S&P 500 Trust ETF (SPY) 25.9% returns over the same period.
Today, I’ll analyze and compare two EV stocks: Lucid Group, Inc. (LCID) and Fisker Inc. (FSR). Lucid Group is headquartered in Newark, California, produces and sells electric vehicles, EV powertrains, and battery systems in the U.S. Shares of LCID are up about 276% year-to-date. Founded in 2016, Fisker, Inc also engaged in the development and marketing of EVs in the U.S. Shares of FSR have returned 27.7% year-to-date.
Recent Developments
On December 8th, Lucid Group announced its plans to raise $1.75 billion by selling 1.25% convertible senior notes, maturing in December 2026. The company plans to use proceeds to fund its corporate expenses. The news wasn’t perceived as positive by the Wall Street community. The company is obligated to pay interest on these notes, which directly affects its bottom line. As a result, shares of LCID have tumbled over 18% after the announcement.
On November 17th, Fisker revealed its Fisker Ocean SUV at the 2021 Los Angeles Auto Show. The company’s SUV has plenty of state-of-the-art features and competitive pricing. The base model, Ocean Sport has a front-wheel-drive, 275 horsepower, and 250 miles of driving range, with a price of $37,499. The high-end model of Fisker’s lineup, Ocean Extreme, will be priced at $68,999. With the industry’s positive reviews, the company is expected to experience a great demand for its vehicle.
Recent Financial Performance & Analysts Estimates
For its fiscal third quarter ended September 30th, 2021, Lucid Group's total revenue decreased 31% year-over-year to $232,000 due to lower sales of battery pack systems and supplies for vehicles. Its Net Loss rose 225% year-over-year to $524.4 million in Q3. Consequently, the company reported GAAP EPS of ($0.43), missing consensus by $0.21. However, there’re a lot of positive signs in its report.
In Q3, the company substantially strengthened its liquidity positions through the closing of the de-SPAC reverse merger + PIPE, leading to $4.4 billion of cash on hand.
Also, the company has over 13,000 reservations for its EV, with more than $1.3 billion in estimated bookings.
For the fourth quarter, the analysts expect LCID’s EPS to stand at ($0.45). Besides, analysts forecast that its Q4 revenue should increase to $89.98 million amid the start of production in September 2021.
On November 3rd, Fisker announced its third-quarter earnings results. The company hasn’t generated any revenues yet as it is still in the development stage. Its Q3 Non-GAAP EPS has been reported at ($0.37), missing analysts’ expectations by just $0.01.
On the expenses side, the company’s general and administrative costs totaled $10.27 million in Q3, up 57% year-over-year. Fisker’s research and development expenses stood at $99.29 million versus $3.4 million as of 3Q2020 primarily due to higher costs related to Ocean and PEAR vehicle programs. As a result, loss from operations came in at $109.84 million, which is 176.95% higher than its year-ago value of $39.66 million
As of September 30th, 2021, the company had total cash of $1.40 billion. With a cash burn rate of $160.38 million as of nine months ended September 30th, the company shouldn't face any liquidity problems in the foreseeable future.
Currently, Wall Street expects Fisker's EPS to decrease in the fourth quarter of 2021 to ($0.47) compared to its year-ago value of ($0.05). Analysts expect Fisker to generate its first meaningful revenues of $242.73 million in FY2022.
Bullish Options Bets Placed On LCID Stock
During the December 10th trading session, there was a purchase of about 4,019 $45.00 December 17th call options for $0.46 per contract. Moreover, this transaction brings the total number of open contracts to 14,919 (source: barchart.com). A buyer of those calls needs Lucid stock to rise to $45.46 by the expiration date to break even, implying an upside potential of about 17% from LCID's current price.
Conclusion
In my opinion, LCID, at these levels, is a better long-term buy. The company is already in the commercial stage and should generate its first meaningful revenue in Q4. In addition, LCID has a better liquidity position. And the recent dip in LCID shares allows investors to scoop up its shares with a higher margin of safety. Finally, options market traders are also bullish on LCID.
LCID shares were trading at $39.15 per share on Monday afternoon, up $1.49 (+3.96%). Year-to-date, LCID has gained 291.11%, versus a 26.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.
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