Shares of some high-flying electric vehicle makers retreated on Wednesday, putting brakes on a euphoric rally that has seen them surpass legacy automakers such as General Motors in market capitalization despite questions about their business models.
Luxury electric car maker Lucid Group Inc, the most heavily traded U.S. stock on Wednesday, fell 2per cent, while Rivian Automotive Inc dropped 14per cent, for the first time since its blockbuster market debut last week made the company the second-most valuable U.S. automaker.
Lucid’s market value eclipsed that of Ford on Tuesday after the company said it is confident of producing 20,000 of its upcoming Lucid Air sedans in 2022.
Analysts said Rivian’s stunning show in its initial public offering lifted demand for other EV stocks. They added that a pullback in Tesla’s stock after chief Elon Musk offloaded his stake worth billions of dollars also spurred appetite for others in the sector.
Tesla shares gained 1.1per cent, rising for a second day, as investors appeared to take in stride news of Musk selling another US$973 million in stock to pay taxes after exercising options.
Electric pickup truck maker Canoo surged 10.9per cent to hit over a five-month high after the company said it would start U.S. production in the final quarter of 2022, sooner than previously announced 2023.
Lucid, Tesla and Rivian were among the top-most discussed stocks on investor-focused website stocktwits.com, signaling interest from small-time investors.
“What you’re seeing is these unbelievable valuations when you don’t have any profitability,” said Stephanie Lang, chief investment officer at wealth management firm Homrich Berg.
“You have to be careful here because oftentimes when valuations really are stretched and have no basis, that’s going to end badly.”
Graphic: Three of the most valuable U.S. carmakers are EVs now Three of the most valuable U.S. carmakers are EVs now -https://graphics.reuters.com/TESLA-MUSK/zgpomkyaopd/chart.png
(Reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Maju Samuel)
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