RIVN or LCID: Which Stock is Better Positioned Pre-Q4 Earnings?

Core Viewpoint - The electric vehicle (EV) industry faces challenges due to high pricing and political factors, impacting the performance of California-based startups Rivian Automotive (RIVN) and Lucid Group (LCID) as they prepare to report their fourth-quarter results [1] Rivian Automotive (RIVN) - The Zacks Consensus Estimate for RIVN's loss per share in Q4 2024 is 66 cents, an improvement from a loss of $1.36 in the same quarter last year, with revenue expectations at $1.43 billion, reflecting an 8.5% year-over-year increase [2] - Rivian's fourth-quarter deliveries reached 14,183 units, exceeding Wall Street estimates and significantly up from 3,972 units in Q4 2023, which is expected to positively impact revenues [4] - Rivian has an Earnings ESP of +3.54% and a Zacks Rank of 3, indicating a potential earnings beat [3] - The company aims for a modest positive gross margin in the upcoming quarter, supported by efforts to improve its cost structure [4] - Rivian's stock has increased by 6.5% over the past six months, indicating a better performance compared to the sector [9] Lucid Group (LCID) - The Zacks Consensus Estimate for LCID's loss per share in Q4 2024 is 26 cents, an improvement from a loss of 29 cents in the previous year, with revenue expectations at $225.5 million, representing a 43.4% year-over-year increase [6] - Lucid sold a record 3,099 vehicles in the December quarter, marking a 79% increase year-over-year, which is likely to drive revenues [8] - However, Lucid has an Earnings ESP of +3.85% and a Zacks Rank of 4, suggesting uncertainty regarding an earnings beat [7] - The company has consistently missed EPS estimates in the past four quarters, with an average negative earnings surprise of 14.78% [8] - Lucid's financial stability is a concern due to high cash burn and significant shareholder dilution from capital raises, despite strong backing from Saudi Arabia's Public Investment Fund [12] Performance & Valuation Comparison - Rivian is positioned more favorably in terms of valuation, trading at 2.65X forward sales compared to Lucid's 6.5X, although both are at premiums to the auto sector's 1.48X [14] - Rivian's focus on cost efficiencies and upcoming model launches, including the R2, R3, and R3X, are expected to enhance its profitability outlook [11] - In contrast, Lucid's ongoing financial struggles and dilution risks make it a less attractive investment option at this time [13]