Lucid Group, Inc. (NASDAQ: LCID) is an EV startup that sells batteries for Formula E. The company focuses on the luxury segment of the EV space. It is based in Silicon Valley, and its CEO is the former chief engineer of the Tesla Model S, Peter Rawlinson. The company aims to inspire the adoption of sustainable cars by creating captivating luxury EVs.
Lucid Group Stock Performance
Lucid Motors stock (LCID) has had a rough 2023. The stock is down 24.64 year-to-date. The stock is also down 91.98% from its all-time-high price of $58, achieved in early 2021. The stock has lost 26.40% of its value in the past six months. However, it has made some gains in the past 30 days, rising 16.25%.
One of the biggest shareholders in the company is the Saudi Sovereign Fund, which owns a 60% stake in the startup. Soon after the company went public in July 2021, the stake was valued at around $55 billion. However, it has since lost nearly 90% of its value and is now around $5 billion as Lucid Group’s losses pile up.
However, the sovereign fund has not lost money on the Lucid Group’s investment. They invested $1.3 billion at the start of 2018. Consequently, their investment has appreciated despite the heavy loss of value suffered by the stock.
Lucid Motors Quarterly Earnings
In its latest Q3 2023 earnings report, the company reported a net loss of $630,894,000. Revenue for the quarter was $137.81 million, missing estimates by 29.40%. However, the reported EPS of -$0.25 beat analysts’ estimates by 33.53%. In the past four quarters, Lucid Group has beaten EPS estimates only 50% of the time.
The reported net loss means that the gross margin stood at -207.74%, which means it cost more to make the luxury EVs than the cars they sold in that quarter. In Q2, Lucid Motors reported a net loss of around $764 million, which implies Lucid Group makes a $0.5 million loss on each car they sell.
Responding to the claims, the company’s CFO said the calculations were based on misleading assumptions. She added that the company was taking various measures to cut overhead.
Why Lucid Stock is Underperforming
Lucid Group’s poor performance can be attributed to worsening macroeconomic conditions. For instance, rising interest rates mean consumers have a hard time finding good financing for their cars. The company has seen revenue fall 29.49% year-over-year due to these challenges.
For a growth-based company, falling revenue is a red flag. However, worsening macroeconomic conditions are not the sole issue. Within the same environment, Rivian has grown sales by 149%, while Tesla has managed to increase sales by 5%. While Lucid’s product offering is attractive and unique, it does not seem to have found demand for it.
Lucid Group Stock Forecast
Wall Street analysts have given LCID stock a solid hold rating. The highest price prediction for the stock is $12, while the lowest is $4. LCID Stock’s average price prediction is $6.41, a 39.96% upside on the current price of $4.57.
Should You Buy LCID Stock
LCID stock has struggled to find demand for its luxury EV lineup. However, the company has a solid Saudi national wealth fund lifeline. The country aims to become an international hub when it comes to EVs.
In line with that ambition, it has established Lucid Motors’ first international facility, which has a production capacity of 5,000 cars per year. In the future, the goal is to expand that capacity to over 100k per year.
Lucid Group stock has performed quite poorly despite the lifeline in recent months. Its current price-to-sales ratio is 15.5626, making the stock more expensive than Tesla, which has a P/S ratio of 8.844. Consequently, the hold rating by analysts is accurate. It would be prudent to wait for more quarterly data before purchasing LCID stock.
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