Investing.com – Tesla Inc (NASDAQ:) boss Elon Musk thinks his company’s competitors, Rivian Automotive Inc (NASDAQ:) and Lucid Group Inc (NASDAQ:) are threatened with bankruptcy
In an interview with podcasters Tesla Owners Silicon Valley and the Kilowatts published on Tuesday, Elon Musk indeed warned Rivian and Lucid investors that the two companies are on a slippery slope.
“Unless something changes significantly with Rivian and Lucid, both are going to go bankrupt,” he said.
The solution, according to Musk, is simple: “My advice to Rivian would be to cut costs dramatically immediately or they’re doomed.”
Musk also explained that the problem is that the two companies compete in an industry where new cars generate very little profit, with the bulk of revenue coming from the lucrative parts market for repairs and maintenance.
However, Lucid and Rivian only started deliveries at the end of last year, and must now face the current risks of recession before they can increase production in their factories.
Should you invest in Rivian, Lucid or Tesla shares?
From a stock market perspective, it should be noted that Rivian and Lucid shares have so far posted a sharply bearish stock market performance since the start of the year. Rivian shares have fallen 71.7% this year at last night’s closing price, while Lucid is down 56.2%. However, Tesla is doing little better, with a 41% drop since the start of the year.
Looking ahead, analysts are particularly bullish on Rivian stock. Indeed, the average target of analysts who follow the Rivian share, which stands at $58.5, implies an upside potential of more than 100% compared to the current price. On the other hand, the InvestingPro fair value of the Rivian share, which is based on a synthesis of financial models, is limited to $32.44, representing an upside potential of just under 12%.
The situation is the same for Lucid stock, with an average analyst target of $29.98, or 71% upside potential, and an InvestingPro fair value of just $17.18, 2% below yesterday’s closing price.
Finally, with regard to Tesla, analysts forecast an increase to $937.55 on average over a 12-month horizon, representing an upside potential of 34%, and an InvestingPro fair value of $755.76, which implies a potential of more than 8 %.