LCID Stock: Why Lucid Can’t Survive and Thrive Long Term

Known for its luxury EV models such as its own Lucid Air, The Lucid Group (NASDAQ:LCID) is currently facing mixed reviews from analysts. While its advanced technology supports growth, financial and operational challenges pose risks. Amid the continued tech selloff and recession fears, many rightly view LCID stock as a prudent hold in this environment.

That said, company CEO Peter Rawlinson expressed optimism about Lucid’s sales growth, cost-saving initiatives and the company’s upcoming launch of Gravity. He pointed to the technology’s impressive efficiency of 5.0 miles per kilowatt-hour as a testament to their leadership and potential.

Lucid CFO Gagan Dhingra also attributed the company’s strong Q2 performance to Lucid Air sales growth and cost reductions. He noted that the PIF commitment of $1.5 billion ensures liquidity until at least Q4 2025.

Here’s what you need to know about LCID’s recent stock price movements and events before you consider investing in this stock.

Q2 misses EPS but beats revenue

Lucid Group shares rose in July after strong Q2 delivery numbers with 2,394 vehicles delivered – a 70% year-on-year increase. Shares rose about 4 percent, hitting about the highest level since mid-May. Despite recent gains, Lucid shares have fallen 60% over the past year, hitting an all-time low of $2.29 in April amid financial concerns.

Lucid delivered a record 2,394 vehicles in Q2 2024, up 22% from Q1. Production improved as the company managed to build 2,110 models, propelling revenue to $200.6 million. That beat market forecasts, but an expected loss of more than $0.29 per share ruined the party for many. However, Lucid has strong liquidity, holding $4.28 billion in cash plus a $1.5 billion funding round from the Saudi PIF. The recent investment by a Saudi affiliate PIF has increased the support and production of the Gravity SUV. This ensures liquidity until Q4 2025.

Delayed production of the Gravity SUV

According to the company’s management team, the Lucid Gravity SUV will have a late release in 2024, but will come with a price tag of $80,000. The prototype was recently completed, featuring advanced technology and design. The Lucid Air Pure 2025 boasts top efficiency with five miles per kWh and 146 MPGe.

The company claims its technology is unmatched and will continue to drive down the cost of electric vehicles. Lucid’s Air Pure, which now starts at $69,900, highlights ongoing interest and future expansion into the mass market with a new mid-size SUV planned for late 2026.

Lucid’s earnings report highlighted the upcoming Gravity SUV, which will begin production later this year. The seven-seat SUV with a 440-mile range will be priced under $80,000, potentially expanding the market for the Lucid. CEO Rawlinson also teased a low-cost, high-volume midsize model that begins production in late 2026 with a sub-$50,000 price tag.

Despite these developments, Lucid’s current financials show mixed results: Revenue rose 10% quarter-on-quarter but missed estimates by $10 million, while research and development expenses rose 17%.

LCID stock remains a risky bet

With short interest of more than 10% and a significant loss of cash, Lucid faces ongoing challenges due to high operating losses and weak demand. The company cut the price of its Air sedan by 10 percent to boost sales, but may face sluggish growth amid a broad slowdown in demand for electric vehicles. Despite efficient battery technology, Lucid’s vehicles lack distinct advantages over competitors whose features have become more standardized and affordable.

My recommendation is to stay away from Lucid stock as it can be bought at a discount once its market position stabilizes. Despite rising shipments, Lucid’s $600 million in revenue and $7.2 billion market cap suggest high expectations. Analysts predict that break-even profitability will not be reached until at least fiscal year 2028, which may lead to long-term losses for investors.

• Lucid Motors recently secured $1.5 billion in funding from Saudi Arabia’s PIF.
• The company is shifting its focus from energy storage to prioritize vehicle development.
• LCID shares, down 25% over the past year, could fall further.

At the time of publication, the responsible editor had (either directly or indirectly) no position in the securities mentioned in this article.

At the time of publication, Chris MacDonald did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.