Discover more from Due Diligence
Pessimistically Optimistic + Two EV stocks show promise
A quick fix of the latest financial happenings.
Good morning, investors!
If this is your first time with us, don’t forget to subscribe here. If you enjoy today’s issue, please hit the heart button at the end of the report.
Without further ado…
One Interesting Read: Pessimistically Optimistic
In general, our occupations can influence the way we think. In the realm of finance, that’s particularly true in terms of investing outlooks and strategies — bond traders tend to be bearish, while stock traders tend to be bullish.
Regardless of which side one leans toward, the wisest investors seek to understand the other side’s perspective.
An investor by the pseudonym of “Sleepwell” leverages their experience in fixed income to share three lessons that equity investors should take to heart when analyzing companies, which is quite relevant considering the current state of affairs. Here are those lessons:
Never Forget About the Downside
The Importance of Reflexivity
Leverage Rarely Kills, Cash Coming Due Does
Enjoy Sleepwell’s perspective: What The Optimist Can Learn From The Pessimist.
Two Price-Beaten But Promising EV Stocks
Fisker FSR 0.00%↑
Shares of FSR are down about 45% this year. Yet, operationally, two factors continue to work in the EV-maker’s favor.
First, despite supply chain issues and chip shortages around the world, Fisker remains on track to commence production of the Ocean, its inaugural all-EV model, on November 18. (It rolled out the first model from Magna’s high-volume line on Wednesday.)
Second, even though vehicle sales have slowed globally, preorders for the Ocean have not — there are now 56,000+ preorders for the Ocean, including 5,000+ reservations of the Ocean One launch edition. Preorders of the former cost $250, while the latter costs $5,000 (and it hasn’t even been unveiled yet).
Lucid LCID 0.00%↑
Shares of LCID are down nearly 60% in 2022.
Like the Fisker Ocean, the Lucid Air is in high demand with 37,000+ reservations through the beginning of August, which equates to about $3.5 billion of potential sales.
Unlike the Ocean, production of the Air has already commenced — but logistical struggles and broader supply chain issues forced the company to slash its 2022 production guidance range from 12,000–14,000 to 6,000–7,000.
Assuming the company can fix its logistical pains and navigate macroeconomic conditions in the near term (two big assumptions), it’ll have no problem meeting demand.
Currently, Lucid’s Arizona-based production facility has the ability to push out 34,000 models of the Air per year. Once phase two of the facility’s expansion project is completed (est. early 2023), the company’s production capacity will jump to 90,000 models of the Air and Gravity (its upcoming electric SUV). Moreover, Lucid recently broke ground on a Saudi Arabian factory that’s expected to be capable of producing 155,000 models.
Three Eye-Opening Tweets
And finally, we close with three eye-opening tweets.
A bit of good housing news.
A bit of good supply chain news.
Happy birthday (deathday?), Lehman brothers.
Thanks for reading. Don’t forget to hit the heart button if you enjoyed today’s report.
If you haven’t subscribed already, you can do so here.