Key Factors

  • Lucid had one other tepid quarter with growing money burn, sending shares down 15%. 
  • The corporate is capitalized now however will burn via it shortly, elevating the danger of extra dilution. 
  • Quick curiosity is excessive and can weigh on the value motion for quarters to come back. 
  • 5 shares we like higher than Lucid Group

Lucid’s NASDAQ: LCID inventory worth has been down-trending since 2021, and it’s not 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, price is among the many largest elements driving customers, and Lucid automobiles are costly EVs, it’s unlikely Lucid will change path quickly. 

Total MarketRank™
1.98 out of 5

Analyst Ranking
Cut back

Upside/Draw back
56.5% Upside

Quick Curiosity
N/A

Dividend Energy
N/A

Sustainability
N/A

Information Sentiment
-0.19

Insider Buying and selling
N/A

Projected Earnings Progress
Lowering

See Full Particulars

Lucid CEO Peter Rawlinson touted plans for a low-cost mannequin to rival opponents like Tesla NASDAQ: TSLA, however that is most certainly a pipe dream. Rawlinson thinks we may 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 continues to be unable to provide such a automobile. Tesla makes cash and might maintain its operations unaided whereas leaning into the low-cost route; Lucid doesn’t. Even when Lucid can carry a low-cost mannequin to market by 2026, Tesla is projecting 2025 for its low-cost model, so it should seemingly retain its management place. 

Lucid Is Clearly Underperforming Expectations, Shares Fall 15%

$2.71

+0.09 (+3.44%)

(As of 05/8/2024 ET)

52-Week Vary
$2.29

$8.37

Worth Goal
$4.24

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 predicted to stay sizzling this 12 months. Spending is critical to ramp up new automobile growth. 

Among the many many issues are capitalization. The corporate is well-capitalized at this time and acquired $1 billion in extra funding throughout the quarter, but it surely comes at a value. The brand new funding and different dilutive efforts have elevated the share rely by 25% since final 12 months, and extra are coming. The stability sheet highlights embody 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 business, 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 seemingly 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; extra dilution could possibly be on the desk earlier than the tip of 2024. 

Analysts May 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 rankings 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 probably be confirmed in that situation and should prolong to the low $2 vary or decrease. The MACD and stochastic favor a brand new low, which can come inside days or even weeks. 

Earlier than you take into account Lucid Group, you will need to hear this.

MarketBeat retains monitor of Wall Avenue’s top-rated and finest performing analysis analysts and the shares they advocate 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 checklist.

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