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Lucid Stock Hits Record Low Lucid Group Faces Steep Challenges in Fierce EV Market

Lucid, trading under the ticker symbol (NASDAQ: LCID), hit rock bottom in today’s trading session. The company’s share price plunged 4.7%, diving as much as 8.3% during the trading day, according to data from S&P Global Market Intelligence.

Tesla’s Price Cut Rattles Lucid Stock

The day’s nosedive was triggered by Tesla’s aggressive reduction of the price on its Model Y vehicle by 5,000 euros (approximately $5,430) in Germany, along with similar price slashes in France, Norway, and the Netherlands. This move comes hot on the heels of significant price cuts on Tesla’s Model 3 and Model Y vehicles the prior week, pointing to a waning demand in the EV market and forewarning of headwinds for other competitors in the industry.

Is Lucid a Viable Investment Amidst Market Woes?

Lucid, a fledgling contender in the EV space that went public through a SPAC merger in July 2021, witnessed a staggering 95% drop from its peak following the day’s setback. Despite the considerable markdown, the company still boasts a valuation of approximately 4.6 times this year’s projected sales. Equally crucial, Lucid remains a substantial distance away from profitability, even under an optimistic business trajectory.

LCID PS Ratio (Forward) Chart

LCID PS Ratio (Forward) data by YCharts

In Q3 of 2023, Lucid reported revenue of $137.8 million from 1,457 vehicle deliveries while holding approximately $4.4 billion in cash, equivalents, and short-term investments. However, the company is engulfed in a string of cash burn, culminating in a net loss of about $752.9 million for the period.

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Lucid’s long-term survival hinges on a massive ramp-up in vehicle production and sales, along with maintaining robust pricing power in the ultra-luxury market. Yet, with Tesla once again slashing prices on its vehicles and major automakers such as General Motors and Ford trimming plans for EV production, Lucid finds itself grappling with a dim demand landscape in the near horizon.

Despite the colossal plunge from its pinnacle, Lucid stock retains substantial risk. While the company may overcome upcoming challenges and inch closer to profitability, its stock could likely see explosive gains beyond current pricing. Nonetheless, investors must comprehend the daunting odds against the company, acknowledging the potential for further depreciation of its already beleaguered stock.

When considering an investment in Lucid Group, it’s crucial to note that the Motley Fool Stock Advisor analyst team identified 10 stocks they believe would outperform in the near future, with Lucid Group not making the cut. The service, which has significantly outperformed the S&P 500 since 2002, provides a comprehensive investing blueprint, including regular analyst updates and two new stock picks monthly.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.