Lucid Group today
(As of 5:45 p.m. ET)
- 52 week range
- US$1.93
▼
$4.84
- Target price
- $3.16
Lucid Group NASDAQ: LCID The stock price is recovering from a new low set in November, suggesting a bottom is in play. However, the company’s risks remain and the downward trend continues, so investors should be cautious. The return above $2.70 in mid-December is promising, but it has yet to cross the critical resistance point near $2.90. This level coincides with the lower edge of the gap formed in October and the 150-day EMA, which could provide strong resistance to rising prices. The narrowing of the gap was caused by new share placements. The company says the market misinterpreted the move, but it’s hard to misconstrue the dilutive moves for a company that is struggling to gain traction.
Lucid Group Dilutes Shares: Headwinds to Share Price Growth Rising
Lucid’s stock dilution is excellent. The company went heavily dilutive in 2023 and 2024, selling most of its shares to the Saudi PIF as well as raising capital on the open market. As a result, there are now more than a million redeemable preferred shares on the balance sheet. The company’s deficit was up 25% year-to-date (YTD) at the end of the third quarter, shareholders’ equity had halved, and book value had deteriorated significantly. At the end of the third quarter, the company’s book value was just over $1.15 per share, less than half its trading price in mid-December. As for the Saudi PIF, it owns about 60% of LCID shares and may soon become the full owner of the company. Saudi Arabia’s ultimate goal is to provide automobile production and jobs for its people.
Dilution aside, Lucid’s balance sheet is in good shape. The company recorded an increase in cash compared to the prior year’s third quarter and had enough cash to sustain operations for nearly a year at the third quarter’s burn rate. However, the company’s cash is down year-to-date despite stock sales, inventories are down, current and total assets are down, and liabilities are up. Total liabilities are up 30% year-to-date and are likely to rise as it takes more than four quarters before Lucid becomes profitable. Investors should expect another round of dilutive measures in 2025.
Lucid Group stock forecast today
$3.16
Growth potential 16.44%Hold
Based on ratings from 9 analysts
| High forecast | $4.50 |
|---|---|
| Average forecast | $3.16 |
| Low forecast | $2.00 |
Lucid Group stock forecast details
The fourth quarter report could be a catalyst for higher stock prices. Analysts are forecasting another quarter of double-digit growth, but there are challenges. First, analysts raise their estimates and set the bar high before publication; superiority is unlikely. Add to that a sequential decline in revenue and a slower year-over-year growth rate, and the odds are high that the report will be a bust. In terms of analysts’ stock price targets, the consensus price estimate for the stock is above $3 but trending lower, creating headwinds for the market. The revision trend suggests fair value is below $3 and could decline before rising. Analyst trends are unlikely to improve significantly in 2025 without strong signs that demand is strong, production is ramping up to meet it, and cash flow is improving.
Short of the Saudi PIF, institutional activity cannot be relied upon to help support this market. Institutions other than PIF hold just 9% of the shares, and while activity is mixed, the balance sheet is net bearish for the stock. Additionally, the short interest rate is very high at 30%, making the selling headwind strong and potentially insurmountable. In this scenario, LCID stock could rise, but that would likely set the market up for the next downturn.
Shuffling of electric vehicle manufacturers will lead to industry consolidation
There is a shake-up of electric vehicle OEMs, with some going bankrupt and others merging with other companies. Lucid is currently in talks with other automakers in search of partnerships that will help it control costs and expand its presence in the electric vehicle market. One possibility is that Lucid would share its powertrain best practices in exchange for supply chain considerations to benefit from efficiencies of scale. Rival Rivian NASDAQ: RIVN similarly cooperates with Volkswagen. This also reduces its value to investors.
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