Is Lucid Stock (NASDAQ:LCID) a Buy Now? Lucid Group: Navigating the Bumpy Road Ahead

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By Ronald Tech

2021 was the year of soaring highs for electric vehicle (EV) stocks. But as 2022 rolled in, the gleaming promise sputtered into a sluggish reality. Consumer spending slackened, dragging multiple EV stocks down, including Lucid Group (NASDAQ:LCID), now stooping 95% below its peak. Yet, in these depths, lies a burgeoning opportunity to snag a thumping bargain amid the global EV evolution.

An Overview of Lucid Group

Lucid Group, a trailblazing confluence of technology and automotive prowess, specializes in the luxury electric vehicle segment. Its lead offering, the Lucid Air, claims the throne as the lengthiest-range, fastest-charging car on the streets. Sporting an estimated 516-mile range on a single charge, the Lucid Air bedazzles as a battery-powered luxury sedan.

With a robust panoply of 31 studios and service centers across North America, three in Europe, and an additional presence in the Middle East, Lucid Group wields an expansive sales network, both in-person and online. The company also cues in a burgeoning vehicle service network, equipped with service hubs and a mobile service arm, backed by a steadfast list of trained collision repair shops.

A Focus on Expansion

The horizon of Lucid’s expansion stretches wide, embracing grand designs for vehicle launches in the imminent years. The company’s blueprint is already inked for the Lucid Gravity, a luxury sports utility vehicle slated for release this year. Beyond these, plans are afoot to amplify manufacturing capabilities, balancing luxury with mass-market appeal.

While the Lucid Air currently wafts off the production lines in Casa Grande, Arizona, the fully-armed manufacturing facility is yet in the offing, projected to bolster annual output to 90,000 vehicles, a quantum leap from 2022’s 34,000. Additionally, the company is diligently constructing an EV manufacturing bastion in Saudi Arabia, envisioning an annual shipment of 155,000 units.

How Did Lucid Group Perform in 2023?

Well, not without a smudge. Lucid Motors landed shy of its own production estimates, churning out 8,428 vehicles and delivering 6,001 in 2023. A modest quarter-end tally of 1,550 manufactured units begot 1,457 deliveries, raking in sales of $137.8 million juxtaposed with capital expenditures weighing in at $192.5 million.

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Yet, the financial fibres of the tale are frayed – a net loss of over $2 billion through the previous three quarters, exacerbated by threadbare cash reserves. To stitch this up, Lucid pared its workforce by 18% and bid adieu to Sherry House, its CFO.

Lucid Group Stock Will Remain Volatile

Speeding in the automobile manufacturing lane is a cash-guzzling race. For Lucid Motors, scaling up manufacturing to savor economies of scale and sturdy profit margins beckons as a Herculean feat. Tesla’s early innings brimmed with a similar quest. In Q3 2018, the electric behemoth notched its maiden positive operating income, peddling 245,200 vehicles that year.

Akin to a hare battling a tortoise, Lucid capped 2023 with under 9,000 deliveries, signposting a hike up a vertiginous ascent for enduring profits. New and legacy EV manufacturers like NIO, Ford, and General Motors loom as additional adversaries. And yet, perched at a numerical cliff, Lucid confronts the spectacle of raising capital multiple times in the coming decade, each stride exacerbating shareholder dilution or crumpling the balance sheet.

What is the Target Price for LCID Stock?

Construction workers brandish the chalk – out of nine analysts, none lay odds on LCID, with eight opting to abstain and one flagging “sell”. The consensus teeters at a “hold”, accompanied by an average LCID stock price target of $5.09, a 51% bonus atop today’s trading price.

The Final Takeaway

Emblazoned in the stars, Lucid Motors embodies the avatar of a high-stakes gamble. Its roadmap unfurls production and delivery surges, strapping up profit margins while navigating the tempestuous macro winds to court investor sentiment. Yet, cloaked in a significant discount to consensus estimates, and bejeweled with a duo of secular tailwinds, the stock teases itself into worthwhile contemplation.