Why Tesla and Nikola Dropped While Lucid Stock Jumped Today
Tesla (TSLA -1.80%) investors didn’t react well to the second-quarter delivery date the company released over the weekend. But there was some good news within those results. The electric vehicle (EV) leader said it set an all-time monthly record for deliveries in June. That helped the stock recover Tuesday after it initially dropped. But the company’s production may soon face new headwinds, and concerns about those feeling the stock downward by as much as 2.5% Wednesday morning. Electric truck start-up nikola (NKLA -1.93%) has its own issues, and after that company released a note to shareholders regarding them, its stock also fell.
Conversely, there was some positive news from another EV start-up that had Lucid Group (LCID 5.70%) shares popping Wednesday. As of 11:20 am ET, Lucid stock was up 7.1%. At that time, Tesla and Nikola were down 1% and 1.4%, respectively.
What was good news in June for Tesla, however, it may become a headwind soon. The company delivered a record 78,000 electric vehicles from its Shanghai plant in June, according to a Barron’s report citing data from the China Passenger Car Association. But in Shanghai, 24 new cases of COVID-19 were diagnosed, and Bloomberg reports the government there is another beginning round of mass testing in line with China’s “zero COVID” policy. This raises the possibility of a new lockdown in Shanghai just as Tesla and other automakers in China have ramped production back up after the prior lockdowns.
Lucid, of course, does not operate outside the US at this time, so investors are focused on its sole plant in Arizona. And after EV start-up Rivian Automotive delivered strong production and delivery data Wednesday morning, investors took that to be a positive sign for Lucid as well.
Rivian beat expectations with a 72% jump in production in the second quarter compared to the first quarter. Its sales soared 264% and the company reaffirmed its production target for 2022. Both Rivian and Lucid had previously dropped their projections for 2022 production due to supply chain troubles. Lucid hasn’t yet updated investors about its second-quarter performance, but Rivian’s report goats well for what Lucid will have to say.
Lucid also received more good news Tuesday: The city of Casa Grande, Arizona — home to its manufacturing facility — has approved the company’s development plans for the site, as reported by the Phoenix Business Journal.
Lucid had more than $5.3 billion in cash on the books as of the end of the first quarter, so he has the capital it needs for its planned expansion. Nikola also has its manufacturing plant in Arizona, but it is looking for the ability to add capital to support its growth. It has adjourned its 2022 annual meeting for shareholders twice as it struggles to get approval to increase its outstanding share count. The company put out another plea to shareholders Wednesday to vote to approve the proposal for a secondary stock offering before its next meeting on July 18. Investors are viewing the struggle to get approval as a bad sign, as the company will likely eventually need that financial flexibility to achieve its growth goals.
Investors on Wednesday are moving these stocks based on the way the latest news is trending. For Tesla and Lucid, that short-term news shouldn’t result in long-term impacts. For Nikola, though, much will depend on whether it gets approval to issue more stock. Stay tuned to see how it turns out.