What Is Lucid Motors?
Lucid Motors (NASDAQ:LCID) is a luxury electric vehicle maker based in Newark, California, with its AMP-1 production facility in Casa Grande, Arizona.
The company has long been touted as a Tesla-rival, and officially delivered its first vehicles in the fall of 2021. Lucid’s CEO is Peter Rawlinson, a former engineer and executive at Tesla and was famously the Chief Engineer for the flagship Model S sedan.
Lucid’s stock has been somewhat of a roller coaster ride for investors. The company went public via a SPAC merger with Churchill Capital in July of 2021.
Before its merger, the SPAC stock soared to an all-time high price of more than €58 per share due to hype amongst EV investors and meme stock fans.
Since the company went public under the ticker symbol LCID, it’s been a different story. Shares of LCID are down more than 37% in 2022, after hitting as high as €52.20 again in November.
Why Is Lucid Stock Falling?
To be blunt, Lucid Motors had a disappointing earnings report at the end of February. The company missed on nearly every measure for the fourth quarter of 2021 as revenues came in at €23.9 million compared to analyst estimates of €33.1 million.
Lucid also reported a wider loss than expected at €-0.58 per share compared to analyst estimates of €-0.32 per share. In all, Lucid lost €900 million overall in the fourth quarter and €4.3 billion in 2021.
Perhaps the most significant news from the call was that Lucid slashed its production forecast for 2022 nearly in half.
The company now expects to produce between 12,000 and 14,000 vehicles this year, rather than original estimates of 20,000. Lucid cited ongoing supply chain issues and the global chip shortage as catalysts for the lowering of production targets.
On top of that, Lucid also delayed the release of its second vehicle, the Gravity SUV, until 2024. The Gravity was initially expected to be ready for 2023, but Lucid has decided to push the release off to learn more from the Air rollout.
Lucid Stock Forecast
Several issues have plagued Lucid Motors from the start, including the question of how big its market is.
Lucid’s Air sedans start at €70,000 but can sell for as high as €153,000 depending on the model. In a global market where EV makers are trying to create mass market vehicles, the luxury brand demand simply isn’t as high.
There were some good things that came out of the call, including Lucid starting construction on its second production facility.
This center will be based in Saudi Arabia, where the Public Investment Fund owns a 63% stake in the company. This means that rather than following other EV makers into China, Lucid is preparing to capture the market in the Middle East instead.
Finally, Lucid did report that vehicle reservations are up to 25,000 from 17,000 in November. Of course, reservations are always a sort of flimsy metric for automakers as it only takes a €271 deposit and it can be cancelled at any time.
People might recall the controversy when Tesla fans were putting fake deposits down on the Cybertruck to boost the company’s numbers.
Is Lucid stock a good investment right now?
The recent NASDAQ correction has provided some incredible buying opportunities for long-term growth stocks. Lucid is currently on an uptrend, having re-gained more than 13% during the past week.
The stock is still trading below both its key 50-day and 200-day moving averages, which means the long-term trend is still bearish.
If you are bullish on electric vehicles, then Lucid is in a decent window to buy. But in a market environment with rising interest rates that could eat into future revenue growth, investors might want to wait to see if Lucid exhibits any significant growth next quarter.