Lucid’s NASDAQ: LCID inventory worth has been down-trending since 2021, and it isn’t over. The Q1 outcomes aren’t horrible, however they did nothing to enhance the outlook for progress, market domination, or earnings. The outcomes frightened the market as a result of spending is rising, and profitability is as elusive as ever. As a result of competitors within the EV market is heating up, value is among the many largest elements driving customers, and Lucid vehicles are costly EVs, it’s unlikely Lucid will change path quickly. 

Lucid CEO Peter Rawlinson touted plans for a low-cost mannequin to rival rivals like Tesla NASDAQ: TSLA, however that is almost definitely a pipe dream. Rawlinson thinks we might count on such a mannequin, with a goal worth of $40,000, in 2026, which might be very tough given the price of engineering and hurdles to manufacturing. 

Tesla, the present EV market chief, is on the identical monitor and has been for years however remains to be unable to supply such a car. Tesla makes cash and may maintain its operations unaided whereas leaning into the low-cost route; Lucid doesn’t. Even when Lucid can deliver a low-cost mannequin to market by 2026, Tesla is projecting 2025 for its low-cost model, so it can probably retain its management place. 

Lucid Is Clearly Underperforming Expectations, Shares Fall 15%

Lucid didn’t have a horrible quarter, however the 15.6% income progress is 520 foundation factors shy of the consensus as incentives and worth cuts dig into the highest line. The corporate says it produced 1,728 automobiles and delivered 1,967, which aided the working efficiency, however elevated spending offset the acquire. Will increase in R&D and SG&A of 25% YOY led to a GAAP lack of 30 cents, a nickel shy of the consensus and expenditure is anticipated to stay scorching this 12 months. Spending is critical to ramp up new car growth. 

Among the many many issues are capitalization. The corporate is well-capitalized at the moment and obtained $1 billion in further funding throughout the quarter, but it surely comes at a price. The brand new funding and different dilutive efforts have elevated the share rely by 25% since final 12 months, and extra are coming. The steadiness sheet highlights embrace 504,450 shares of redeemable convertible most popular inventory that weren’t there final 12 months. Traders ought to count on additional dilution as a result of the corporate is in a cash-burning trade, has restricted funds, and has billions of unissued shares. 

The share rely and outlook for dilution are two causes the quick sellers have an interest, and the quick curiosity is excessive. The quick rate of interest was working close to 30% on the final report and has probably remained unchanged. As a result of the corporate continues to burn money traders ought to count on the quick curiosity to stay excessive and to extend over time. The corporate is well-capitalized now, however the $700,000 in quarterly burns will eat via $5 billion in a matter of quarters; further dilution could possibly be on the desk earlier than the tip of 2024. 

Analysts Might Put a Backside in Lucid’s Market

Analysts’ sentiment in Lucid soured to Cut back over the previous few quarters and is unchanged now. Nonetheless, the group has hesitated to make revisions instantly after the earnings launch and views the inventory as undervalued till it does. Marketbeat.com tracks 10 analysts with scores on the inventory, and so they include a consensus goal of $4.35 and a low of $2.90. The $2.90 low goal is above the present worth motion and should lead the market to rebound if left unchanged. 

Lucid shares are in a downtrend and should have reached the underside, however there are dangers for bulls; it could possibly be a penny inventory quickly. The 15% post-release drop has the market set as much as retest the latest low, and a brand new low could also be set. The downtrend will likely be confirmed in that state of affairs and should lengthen to the low $2 vary or decrease. The MACD and stochastic favor a brand new low, which can come inside days or perhaps weeks. 

Earlier than you contemplate Lucid Group, you may need to hear this.

MarketBeat retains monitor of Wall Avenue’s top-rated and greatest performing analysis analysts and the shares they suggest to their shoppers each day. MarketBeat has recognized the 5 shares that high analysts are quietly whispering to their shoppers to purchase now earlier than the broader market catches on… and Lucid Group wasn’t on the listing.

Whereas Lucid Group presently has a “Cut back” score amongst analysts, top-rated analysts consider these 5 shares are higher buys.

Simply moving into the inventory market? These 10 easy shares will help starting traders construct long-term wealth with out understanding choices, technicals, or different superior methods.

Get This Free Report