Lucid Group (NASDAQ: LCID) made a grand entrance into the realm of luxury electric vehicles (EVs) in 2021, sporting the tag of the “next big thing” akin to Tesla (NASDAQ: TSLA). Under the leadership of Peter Rawlinson, a Tesla alumnus, Lucid’s promises gleamed with plans to dispatch 20,000 vehicles in 2022 and an ambitious 49,000 in 2023.
However, the road turned tumultuous, marred by supply chain woes, production hiccups, and a series of price markdowns to entice buyers. This tumult bled into the stock market, with Lucid shares plummeting 80% over the last triennium.
Given this backdrop, the pertinent query emerges – is it the opportune moment to buy, sell, or hold stakes in this once-promising EV flagship?
Image source: Lucid.
Upsides and Outlook on Lucid’s Stock
For the optimistic lot, Lucid’s narrative brims with the potential to ramp up deliveries, unveil fresh models, all while basking in the glow of substantial Saudi Arabian sponsorship.
The company steered 3,838 cars off production lines in the first semester of 2024 and eyes a tally of 9,000 by year-end. Alongside its Air sedan variants, Lucid gears up for the launch of the Gravity SUV in late 2024, predicting a revenue surge of 28% to $762 million in 2024 and a bullish leap of 152% to hit $1.9 billion in 2025, driven by an upsurge in SUV sales.
Glancing at the valuation compass, Lucid’s enterprise worth pegged at $9.5 billion seems a fair bargain at a 5x multiple of its projected sales for the coming fiscal. A comparative peek at Tesla’s trade mulls over a 7x sales trajectory for the electric pioneer.
Lucid embarks on a full-throttle campaign to upscale its AMP-1 factory in Arizona from a 34,000 vehicle capacity to a staggering 400,000 units by the next quadrennium. Furthermore, the AMP-2 facility in Saudi Arabia is earmarked for a boosting spree from 5,000 automobiles to a monumental 155,000 by mid-decade.
Underpinning these grandiose blueprints is a robust alliance with the Saudi administration, which wields over 60% of Lucid’s equities via the Public Investment Fund (PIF). Notably, the PIF sees itself procuring 100,000 Lucid vehicles over the looming decade, doubling down on the partnership.
Amassing a hefty $4.3 billion in liquidity by Q2 of 2024 and clinching an additional $1.5 billion lifebuoy from a PIF relay in early August, Lucid visualizes these funds as its elixir running the operations till at least Q4 of 2025.
Should Lucid mastermind a seamless march towards magnification, seers anticipate a revenue swoop to $3.6 billion come 2026 – a tune reminiscent of Tesla’s $3.2 billion serenade in ’14, crescendoing to a monumental $96.8 billion in ’23. A melody if echoed by Lucid could gift investors with the stars.
Contrarian Visions – Reasons Against Lucid’s Stock
Painted in cautionary hues, detractors voice qualms over Lucid’s lingering price paring, towering deficits, and a pronounced reliance on Saudi patronage. The parachuting prices of its Air sedan iterations over the bygone biennium, with the entry-level Pure model wearing a $70,000 tag, ring alarm bells.
Lucid’s outing in the public arena aimed at differentiating from Tesla via lofty-priced luxury vehicles. But recent price downticks – mirroring Tesla’s maneuvers – cast shadows on its standing to command luxury EV sales.
Even with an upswing in production, naysayers predict Lucid to tally net deficits of $2.9 billion in 2024, $2.5 billion in 2025, and $1.7 billion in 2026. In contrast, Tesla tallied a mere $294 million in red when it swelled to a revenue of $3.2 billion in 2014.
Unless Lucid stitches its income-expenditure seams, the specter of a cash drought before scale economics unfurl lurks large. A failure to thrust its business model into sustainability might shuffle the PIF towards divestiture, pivoting towards greener pastures in the EV landscape.
Significantly, no insider purchases stirred the pot over the trailing year, with a frigid three-month span blotched with sales sans acquisitions. The undercurrents of disinterest from insiders augur a frosty spell for Lucid’s revival prospects.
The firm’s share tally emanated forth with a 40% surge over the last trimester, traced back to secondary offerings and stock concessions, a dilution that might entrench impediments against prolonged upswings.
The Lucid Conundrum – Buy, Sell, or Hold?
Lucid’s convulsing voyage might be veering into sturdier waters, yet the horizon fails to paint a persuasive narrative for either buying in or retaining stakes at present. Heeding the cautionary whispers, investors find prudence in either relinquishing or sidestepping Lucid’s shares until foliage of optimism paints a denser canopy.
Considering an Investment in Lucid Group
Before planting your flag in Lucid’s terrain, a word of advice:
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