Lucid Stock Analysis – Is it a Worthwhile Investment in 2024? Lucid Group Stock Tumbles to Record Low Amidst Market Turbulence

By: Alex Freidmen

Lucid (NASDAQ: LCID) stock plunged in Thursday’s trading, closing the session down 4.7% after hitting an alarming 8.3% decline, based on data from S&P Global Market Intelligence.

The stock nosedived following a stark price reduction on Tesla’s Model Y vehicle, by 5,000 euros (approximately $5,430) in Germany, with similar cuts in France, Norway, and the Netherlands. This move by Tesla underscores a softening demand in the EV market and signals challenging times ahead for other industry incumbents, including Lucid.

Assessing Lucid’s Investment Potential

Lucid, a new entrant in the EV space, made its public debut through a SPAC merger in July 2021. Post the recent downturn, the company’s share price stands nearly 95% below its peak level.

LCID PS Ratio (Forward) Chart

LCID PS Ratio (Forward) data by YCharts

Despite the aggressive markdown, the company is still priced at around 4.6 times the projected sales for the year. Moreover, Lucid is distant from profitability, even under an optimistic growth scenario.

In Q3 2023, Lucid recorded $137.8 million in revenue from 1,457 vehicle deliveries. While the company ended the quarter with cash, equivalents, and short-term investments of about $4.4 billion, it is burning through cash rapidly, underscoring a net loss of approximately $752.9 million.

The company’s long-term prospects hinge on scaling up its production and securing pricing leverage in the luxury auto segment. However, with Tesla slashing prices and major automakers like General Motors and Ford scaling back EV initiatives, Lucid is poised to grapple with a subdued demand environment in the near future.

Despite the substantial decline, Lucid’s stock remains inherently risky. If the company overcomes these hurdles and makes strides towards profitability, its stock could witness a remarkable rally from these depressed levels. Nonetheless, investors should brace for tough odds, realizing that the company’s beaten-down stock could witness further erosion.

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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.