What is up Cruisers?!
Tired of reading? Just click on the play button above and you can hear CEO Alan read this week’s newsletter to you!
What is Inside?
The Tweet of the Week
Spotlight: Lucid Motors $CCIV
Portfolio Update
Portfolio News
Trivia
Tweets of the Week
Sponsor- 7Investing
😂HUMOR
The Tweet Of The Week
This week we are starting things a little bit differently with our “Tweet Of The Week!” Check it out:
This is brilliant and funny! But does this have anything to do with stocks? Well, not everything we share has to be about the stock market but this tweet actually is!
How? More to come in the “Portfolio News” section.
Spotlight time!
🔍SPOTLIGHT
Lucid Motors
🚘Background
“The best companies to invest in are SPAC’s trading at 580% premiums with a multi-billion dollar valuation and no revenue.” -Warren Buffett
Kidding! Warren Buffett never said this and never would. This sounds more like something a retail investor would say looking to make a quick buck.
A company that once fit the criteria of our fake Warren Buffett quote was the SPAC $CCIV.
When $CCIV was rumored to be going public with Lucid Motors, the shell company’s stock price ballooned from a $10 valuation to a peak of $64.86 on February 18th- a 548% rise based simply on rumors that they were merging.
So, what the heck is Lucid Motors and why were people so excited about it?
🏢Company
Lucid Motors is looking to become the first seller of high-end luxury EV—they want to be the Audi, BMW, or Mercedes of EV.
Words are one thing. Actions are another. Can they do it?
We at CA think that Lucid will be a successful company and we have five reasons why:
Thematic Growth
As any Cruiser knows, one of our favorite things to look for in a company is whether the industry in which they operate is growing. The theme of “Electric Vehicles” is exploding!
The great Cathie Wood of ARK Invest shared that ARK expects the EV market worldwide to compound at an 82% annualized rate over the next 5 years. That is as explosive as it gets.
The Beauty
Their first car, the Lucid Air, is simply beautiful.⬇️⬇️⬇️
The Battery
So much of the success of EV companies relies on having a battery that charges quickly and will last for a long time. Lucid Motors claims to have just that.
Lucid is boasting a best-in-class 20 minute charge that will power your drive for 300 miles.
Apple—Can you take some notes from Lucid on how to charge things faster? Thanks in advance.
The Management
A principle that Cruising Altitude often stresses is the importance of the executives running the company that we are analyzing. As investors, you have very minimal, if any, impact on day-to-day operations. An investment in a company is an investment in the management.
Lucid Motors has an experienced management team:
CEO—Peter Rawilson, the former head of vehicle engineering at Tesla
VP of Design—Derek Jenkins, former Director of Design at Mazda
VP of Finance—Michael Smuts, who spent over 25 years at Ford
The Demand
Arguably the most important part of the Lucid “as a successful company” thesis is that there is significant demand for the product.
Lucid CEO Peter Rawilson recently shared that the demand for the “Lucid Air” has been “overwhelming.”
Having overwhelming demands in life is not so good.
However, overwhelming demand for your product is very, very good.
💵Investment
Valuation matters. Just because a company is a good company or has a chance to be a good company does not mean it is a good investment.
The stock is currently trading at $25 a share. Therefore, it is trading at a 150% premium to its IPO @ $10.
Lucid announced that the company would be going public at an enterprise value of $11.75 billion. We @ CA think that even the $11.75 billion price tag is hefty. Why?
No revenue currently (and they’ve been in business since 2007)
Threat of current legacy luxury car companies entering “EV Wars”
Only 23% gross margins in 2026! (these tiny PROJECTED margins give very little wiggle room)
“The Unknown”— for a pre revenue company, so much can happen both to the company and to the industry that we just cannot see
But remember, currently the company is trading @ $25 a share, representing a $29 billion valuation.
Yikes!
🚙Ford Motors
To drive our thesis home just a little further (pun most definitely intended) let us look at Ford Motors:
$127 Billion in 2020 revenue
4.2 million cars sold in 2020
Making a significant push into Electric Vehicles
Has over 115 year history and reputation
Ford is trading at a $58 Billion valuation- only $30 Billion (approximately) more than $CCIV. Is Ford undervalued? Who knows. Maybe we will tackle that question another time (we probably won’t because that sounds a little boring). Is $CCIV overvalued? That is for you to decide, but we at CA think it is a little too hot.
📓Final Note
Lucid Motors could be a great company but at this point it does not appear to be a great stock (at least not yet).
Warren Buffett always shares how investing is like baseball where you can wait for your pitch. The beauty of investing is you can watch as many pitches go by as you want! There is no three strikes, you’re out.
This does not look like a home run pitch, so we at CA are going to kick back and wait for the next one that does!
Enjoy our thoughts on $CCIV? Check out our first stock-focused podcast by CA executives CIO Ryan & COO Ethan where we go deeper into the EV market and all things $CCIV. Click Here to listen!
💸Performance
Portfolio Update
As you can see, the portfolio is now a little bit more colorful! Under the “Ticker” column we are instituting a color-coded system that allows Cruisers to see how excited the CA team is about certain stocks.
Here is the breakdown:
🟩Green= “Absolutely Ecstatic”
🟧Orange= “Just Ecstatic”
🟨Yellow= “Some Concerns”
🟥Red= “Big Concerns”
To track our portfolio during the week, click here!
📰NEWS
Portfolio News
Portfolio News
☕ Spilling Tea. Oprah Winfrey’s interview of Prince Harry and Megan Markle, aired exclusively on CBS, drew 17.1 million viewers on Sunday night. The stunning turnout sent $VIAC soaring to open the week, as the stock rose as much as 13% on Monday. We think it is crazy that the stock flew based on a night of viewership numbers, but hey, we will take it.
🎰 $PENNsylvania. $PENN’s Barstool Sportsbook posted the 3rd largest handle in Pennsylvania betting markets for the month of January. Following the success it had last December, Barstool brought in over $1 million in revenue on a $65 million handle. The revenue was lower than usual for Barstool Sportsbook. We are not concerned but it is something we will keep an eye on!
🏌️ Foooore. $ELY finally completed its merger with Topgolf after shareholders voted last week to approve the transaction. What did Callaway’s CEO Chip Brewer (who we wrote about here) have to say? "Callaway and Topgolf are just better together." We wholeheartedly agree!
🧬Anotha one. $NVTA announced that it will partner with medical solutions firm Roche to deliver no cost testing to people in Central America and the Caribbean who are suspected of having spinal muscular atrophy (SMA). This deal is good for Invitae and the world, which is why we can’t stop smiling.
🎮GAMETIME
Trivia Night!
Question 1 (Easy): What services does Fastly $FSLY provide?
Question 2 (Medium): What does NFT stand for?
Question 3 (Hard): 47% of people reported that COVID-19 is negatively impacting which aspect of their life?
Answer
Answer 1: Edge Cloud Computing! If you read last week’s edition, you knew this! In case you need a refresher, cloud computing is the process of computers sharing and retrieving data (information) from a cloud database that is accessible anywhere where you have internet access. The “edge” refers to the process of transferring data from the cloud to the consumer’s device in a way that maximizes the speed of the user’s experience.
Answer 2: Non-Fungible Token! Let’s break this down word-by-word. “Non” means non. “Fungible,” as in can be exchanged with an identical item. “Token,” as in an asset or indication of ownership. Putting this all together, NFTs are unique items, like online trading cards or works of art, that are protected by blockchain such that only one individual on the internet can posses any one NFT (making each one unique, and in some cases, very valuable). Currently, some NFTs are being exchanged for thousands or millions of dollars on website such as NBA Top Shot.
Answer 3: Mental Health. While COVID-19 has taken hundreds of thousands of lives, it has also greatly affected even those who have not been infected. That’s why the services offered by $TDOC & $HEC are so important. Feel free to check $TDOC’s out here.
🗒️TWITTER
Tweets Of The Week
Oh Warren…
GenZ listen up!
“Wait. You don’t have a webcam in your forest”
🤝PARTNER!
7Investing!
This week’s newsletter is presented by 7Investing. 7Investing is a professional stock advisory service led by 7 skilled and experienced investors. The company provides their 7 top stock picks on the first Monday of every month.
Every Monday, Wednesday, and Friday, 7Investing has a live one hour show called “7Investing Now” where they breakdown finance news, specific stocks, and answer all of your questions. It is awesome!
Our Founder & CEO Alan will have a guest appearance on 7Investing Now this Friday! To check out the 7Investing website and learn more about the company, click here!
Pump The Brakes!!!