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Rivian vs. Lucid + The latest Fed projections
A quick fix of the latest financial happenings.
Good morning, investors!
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Without further ado…
One Interesting Read: Lucid vs. Rivian
Forward Cap, a former investment banker turned private equity investor, has spent much of their professional career following and covering the auto industry. Two months ago, Forward Cap brought their automotive insights to Substack, launching the Auto Insights newsletter.
A recent issue caught my eye — a detailed, side-by-side comparison of Lucid Motors and Rivian Automotive.
Lucid LCID 0.00%↑ and Rivian RIVN 0.00%↑ are arguably the two most well-known startups in the auto space, and both OEMs have extremely lofty valuations relative to their production history. (Combined, they delivered only 6,733 vehicles in the first half of 2022.)
Considering the massive shift to pure electric vehicles, it’s no wonder that both companies have seen their share prices surge — and subsequently plummet, but that’s another story. Even though these companies serve different consumer markets, they make for an interesting comparison.
Here’s Forward Cap’s reasoning as to why that is:
Both Rivian and Lucid are at similar stages and that’s part of what makes this comparison so interesting. Both companies make only fully electric vehicles (no hybrids), were founded within a couple of years of each other, and began customer vehicle production in the same exact month. They also have similar market caps today, which makes the comparison very relevant from an investor perspective.
You can read the rest of this piece by following the link below.
Two Consensus Fed Predictions to Know
The war on inflation wages on. On Wednesday, the Federal Reserve bumped rates up another 0.75%, reiterating the message of no pain, no gain (i.e., a tight labor market needs to loosen and demand must wane in order to curtail inflation and return to stable economic conditions).
The Fed also released an update of its economic projections through 2025, which shed light on how expectations have shifted since the last report in June.
Most officials expect rates to max out in 2023, ranging between 4.5% and 4.9% (for comparison, the current midpoint of the Fed’s rate is 3.125%). The majority forecast rates to drop below 3% by the end of 2025; all but one member anticipate rates to fall back below 4% by the end of 2025.
In June, most Fed officials projected unemployment to range between 3.6% and 3.7% by year’s end. That estimate has since risen to 3.8% and 3.9%. However, expectations for 2023 and 2024 experienced far more drastic shifts.
Of course, no one can predict the future, but an unemployment rate of 4.4% would represent another 1.1 million lost jobs.
“The short-run cost via a higher unemployment rate, which is certainly meaningful to people who lose their jobs, is necessary to bring inflation down so that the economy can reap the longer-term benefits of price stability.” — Jerome Powell
Nevertheless, most fed officials still expect economic growth in 2023, signaling that a “soft landing” is still in the realm of possibility in the eyes of the Fed.
Three Eye-Opening Tweets
And finally, we close with three eye-opening tweets.
I love Chipotle, but their burritos are not worth $19 before taxes (even in NYC).
That’s just…wow. #gotech
The joys of home ownership.
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