Lucid Motors (NASDAQ:LCID) has been on a winning streak this month. The trendy electric vehicle (EV) producer has been struggling throughout 2023, battling steep macroeconomic headwinds and declining investor confidence. But the company just received some excellent news on the institutional investing front. Financial institution DNB Asset Management has announced that it has doubled its LCID stock holdings while slashing its positions in two other leading automakers. The investment management giant, whose clients include the largest bank in Norway, also doubled down on its position in video game maker Activision Blizzard (NASDAQ:ATVI). While news of this new investment hasn’t boosted LCID stock yet, investors should be more concerned with what it means for the company’s future growth prospects.
Does this mean that Lucid’s difficult year is finally coming to an end as investor confidence in the startup rebounds alongside share prices? Let’s dive deeper into DNB’s announcement and assess what it means for investors.
What’s Happening With LCID Stock
It’s true that LCID stock hasn’t pulled into the green yet despite this positive catalyst. As of this writing, LCID is down about 1% for the day, though its current trajectory suggests it will keep rising. This turbulence can be chalked up to negative market momentum. Fellow EV stocks such as Rivian (NASDAQ:RIVN) and Fisker (NYSE:FSR) are both down as well, and while industry leader Tesla (NASDAQ:TSLA) is in the green, it isn’t by much.
Market volatility aside, though, the new investment from DNB is great news for Lucid investors. LCID stock has risen almost 14% over the past month, but many experts aren’t convinced of its growth prospects. Analysts from Bank of America Securities and Citi have reiterated “hold” ratings. Although recent price targets are primarily bullish, Lucid has needed to show the world that it shouldn’t be counted out. This vote of confidence from a large-scale institutional investor should demonstrate exactly that. As Barron’s reports:
“DNB slightly raised its Tesla stake 3.3% to 721,810 shares in the second quarter, but the asset manager dramatically increased its investment in another electric-vehicle stock. The firm more than doubled its Lucid stake to 133,684 shares in the second quarter.”
It’s also worth noting that while DNB is doubling down on LCID stock, it is reducing its stake in others. The firm recently slashed its positions in both Ford (NYSE:F) and General Motors (NYSE:GM) during Q2 2023. While it may seem risky to lean away from legacy automakers in favor of a volatile startup, DNB clearly sees Lucid as a key buying opportunity. Shares have fallen 22% over the past six months, but DNB clearly believes they will rise again.
Why It Matters
The investment management giant isn’t the only one to double down on LCID stock lately. As June 2023 ended, Saudi Arabia’s Public Investment Fund (PIF) acquired 265.69 million Lucid shares through its subsidiary Ayar Third Investment Company. As InvestorPlace‘s Eddie Pan reports, the international investment fund likely saw an opportunity to buy the undervalued on the dip. Now DNB seems to be following the same playbook.
This could signal a turnaround for LCID stock as the market adjusts to this news. If this trend continues, Lucid could easily continue rising and make up the ground it lost earlier this year. At less than $7 per share, it presents a valuable opportunity for investors who can be patient and don’t mind some risk.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
