Forget Lucid Stock. This Is a Much Better Buy.

Lucid Group (NASDAQ: LCID) is a small auto manufacturer that's been making some waves in the electric vehicle (EV) space. The company's luxury-focused EVs have won plaudits from some of the top reviewers and authorities in the auto market.

Experts seem to agree that Lucid is delivering high-quality SUVs and sedans in the EV space. On the other hand, the company's stock performance has been very uneven. Despite strong growth for vehicle deliveries and revenue, Lucid's share price has plummeted over the last year.

The stock is down roughly 41% across the stretch, but that doesn't mean it's a great buy even at discounted levels. Meanwhile, one of Lucid's partners could wind up being a much better buy.

Image source: Getty Images.

Buy Uber stock instead of Lucid stock

Earlier this year, Lucid announced that it had entered into a partnership with Uber Technologies (NYSE: UBER). Lucid will be providing at least 20,000 vehicles to support Uber's robotaxi fleet over the next six years. The deal will provide a meaningful sales boost for Lucid and also help to bolster the visibility and brand strength of its vehicles. While the EV specialist could wind up seeing substantial benefits from the partnership, I think Uber stock actually looks like a much better investment.

Over a one-year stretch that saw Lucid post big sell-offs, Uber's share price climbed approximately 22%. Despite the two companies having very different valuation trajectories over the last 12 months, Uber continues to look much stronger on a valuation basis when it comes to fundamentals.

Uber stock currently trades at just 14 times expected forward earnings. While the company faces some tough competition from Tesla, Alphabet, and other players in the robotaxi space, the tech specialist has already shown that its business model can generate plenty of cash. Despite going up against resource-rich competitors in the self-driving tech space, Uber could also be in the very early stages of benefiting from the evolution of the technology.

Despite Lucid's sales surging 68% year over year to reach $336.6 million in the third quarter, the business still posted a loss of more than $1 billion in the period. In addition to big net losses, Lucid investors also have to worry about the continued threat of dilution. Saudi Arabia's Public Investment Fund (PIF) is the EV specialist's majority shareholder, and there's a good chance that Lucid will continue to raise funds by selling shares to the PIF. In turn, investors will see their stake in Lucid diluted if new shares are offered.

With Lucid facing challenges on a variety of fronts, Uber looks like a much better long-term investment right now. Uber has proven it can be a reliable cash-flow generator, and it has multiple avenues to deliver huge growth over the long term.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.