Is Lucid Motors’ $ 41 Billion Market Cap Too Expensive?

To say that there is a lot of optimism among investors Lucid engines(NASDAQ: LCID) the ability to execute one’s vision would be an understatement. The company has a market value of over $ 41 billion despite the fact that its first cars are only get off the assembly line. In this fool live Video clip recorded on October 18, contributors Danny Vena and John Rosevear question whether this high valuation could be justified.

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John Rosevear: The key here is valuation, and I’ll leave it to readers to decide whether a company that just started shipping a few vehicles with a $ 41 billion market cap is cheap or expensive. I think if you look Ford Motor Company (NYSE: F), which is not far above that, is expensive. But if you look You’re here (NASDAQ: TSLA), which climbed back to $ 800 billion or whatever even today, that seems really cheap for the opportunity at hand. What I will say is that this is a good company that in the 4 to 5 years that I have been watching it has kept all the promises it made. The only exception was the start of production of the Air, which they originally planned for in the spring and there is a great story behind that.

Former Ford CEO Alan Mulally, whom many fools will remember, including me, as the person who propelled this wonderful Ford stock price run that we saw in the first half of the past decade, advises Lucid. He’s on the board of one of their investors and he advises Lucid and he walked in and said, “Look, stop production, do some extra pre-production, do these extra quality tests and so on. following.” Lucid did this. The point is, when you’re a trailblazer in this space like Tesla in 2011, you can deliver a car that’s not quite perfect because people buy it for that great tech that’s in there.

Early adopters don’t really care if the panels line up correctly, if there are any flaws in the paint or anything else. But now it’s show time for everyone including Tesla and the Air had to be perfect to go out and he advised them to put extra steps into the plan to make sure and they did. did, and that’s why they waited until September to start production. Good business, good management. People laughed at their range claims when they were first announced a few years ago, but then got EPA certification that was a perfect match for what they said it was going to be. They’re right on time to get those cars out.

Early reviews have been phenomenal that this is a wonderful car to drive that offers a true luxury experience and is faster than the proverbial scalded little animal. Can’t wait to drive one. I sat in a prototype. I haven’t driven one of the production cars yet. The prototype was really impressive. It is of course a luxury company, but their luxury model is very different. It’s light, it’s airy. There were different linen fabrics and woods on the surfaces and so on. Very stylish, but not ostentatious like a German luxury car, a British luxury car or a Cadillac or something like that. What they call relaxed California luxury, which is a little different in flavor and workmanship than anyone else does. The early drivers seem to really like the way it came out and how it was expressed in the early models of the Air.

Danny Vena: Again, that seems to me now, and maybe I’m drawing a conclusion here, but it looks like Tesla might have some real competition here in the near future. Is it an accurate assessment?

Rosevear: Right now, Lucid is positioning it to look like the car you buy after getting the Tesla. It’s a bit higher price, it’s more luxurious, it’s faster, it’s wider and so on. But I think if you look at the timing of some of Elon Musk’s announcements when they announced range increases for certain cars, etc., they’re keeping a close eye on Lucid. Considering that there are a number of former Tesla employees in leadership roles at Lucid, it’s no wonder I am too.

Again, as an investment, you need to take a look at this valuation and decide for yourself whether it is cheap or expensive. I think it’s both cheap and expensive myself. I couldn’t bring myself to pull the trigger on the action, even though it’s a company where we talk about leadership teams and so on. I spent time with Peter Rawlinson the CEO and a few of his assistants and I really love what they do.

I really love who they are and their sense and I really love their sense of themselves and their position in the industry and that they have delivered on all of their promises so far which is not always something we’ve seen in this space, not just Tesla, but definitely Tesla where they’re going to come out and say three months maybe, six months definitely, and then that’s later on the road. They are very careful to promise things that they can achieve and then to achieve what they have promised. I like it in a management team. I like the crisps on the dynamic shoulders. It is not cheap stock. I think this is my last takeaway.

Danny Vena owns shares of Tesla. John Rosevear owns shares of Ford. Matthew Frankel, CFP® owns shares of Lucid Group, Inc. The Motley Fool owns shares and recommends Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.