Lucid leads tech stocks’ 2023 rally thanks to Saudi takeover rumors
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- Shares in electric-vehicle manufacturer Lucid Motors have jumped 69% in 2023.
- It’s even outperforming rival Tesla, which is up a still-stellar 60% year-to-date.
- Speculation of a takeover by Saudi Arabia’s sovereign wealth fund has fueled Lucid’s recent rally.
Electric-vehicle maker Lucid Group has started 2023 with a breakneck rally that’s made it the best-performing stock on the entire Nasdaq Composite.
Its shares have climbed 69% year-to-date, trading at $11.57 as of Tuesday’s closing bell. That makes Lucid the top performer on the tech-heavy index, which itself has jumped 15.7% since January 1.
Lucid is even beating rival EV manufacturer Tesla, which is up just under 60% so far this year at $196.81, despite analysts’ fears.
Tech stocks have started 2023 with a bang, thanks to investors’ growing expectation that the Federal Reserve will have to abandon hikes and start cutting interest rates later this year to support the US economy. Equities tend to rally when interest rates fall, because a lower cost of borrowing boosts the future cash flows that make up part of companies’ valuations.
Lucid shares have also risen thanks to rumors of a looming takeover by Saudi Arabia’s Public Investment Fund, which invests on behalf of the government and already owns over 60% of the carmaker.
The stock jumped 43% on January 27 alone, after the deals website Betaville reported the Saudi PIF could be close to finalizing a full takeover.
Lucid’s share price has fluctuated wildly since it joined the Nasdaq via merging with the Churchill Capital IV SPAC in February 2021. It reached an all-time high of $58.05 shortly after that deal was announced, but it has tended to hover at around the $10 level it first listed for.
Analysts are skeptical that stock in the company — which produced just 7,100 vehicles last year, compared with Tesla’s 1.3 million — will be able to maintain its current rally.
Longtime bear Adam Jonas believes it’ll crash 57% from its current level, and he holds a price target of just $5 for the EV manufacturer.
“We believe the fundamental outlook facing Lucid Group is more likely deteriorating than improving,” he said in a research note last month.
Read more: Tesla’s cratering share price goes beyond Musk’s preoccupation with Twitter. The entire EV market is slowing down.