What happened
Luxury electric vehicle (EV) maker Lucid Group (LCID 5.15%) provided investors with some positive news this week, but the stock is still closing out the week on a down note. Most of this week's approximately 7% drop in the stock is coming today. As of 1:26 p.m. ET, Lucid shares were down 5.8%.
NASDAQ: LCID
Key Data Points
So what
On Wednesday, Lucid reported that it produced 2,282 of its Air sedans in the third quarter, more than tripling its production from the previous quarter. The stock jumped on that news, since it provided some confidence that Lucid seems to have found its production legs and should hit its latest 2022 production target. But economic news from subsequent days spooked investors in riskier assets, especially early-stage companies like Lucid.
Image source: Lucid Group.
Now what
Yesterday, the Labor Department reported the Consumer Price Index (CPI) jumped 8.2% year over year for the month of September, stoking fears of ever higher inflation and a potential recession. An economic downturn isn't the environment Lucid wants as it works to ramp up its production and sales. The company produces high-end luxury electric sedans, and potential buyers seeing their investment assets decline may not want to spend up to $100,000 or more for a new car.
Today, retail sales in September -- the monthly estimate of all consumer spending -- were below expectations. The monthly report was flat year over year when economists expected a slight increase of 0.2%. Considering the rate of inflation in the last year, that data implies that actual spending declined last month.
Investors are looking at the bigger economic picture when considering Lucid as an investment right now. It also didn't help that the company had already reduced its production goal for the year twice. So meeting the conservative projection isn't overly great news in the big scheme of things. But investors in Lucid should know to look at it as a very long-term, speculative venture. The dip in shares could provide a good time for some investors to put an appropriate amount of speculative funds into it.
