LCID Stock’s Make-or-Break Moment: Why It’s Time to Reassess Your Lucid Stake

The outlook of Lucid (NASDAQ:LCID) stock has definitely improved over the last year. According to my Lucid stock analysis, it will release EVs that have much greater chances of becoming very popular than its current offering.

Also importantly, Lucid’s EVs are widely acclaimed as being very attractive, having long driving ranges, and handling very well. However, the shares remain overvalued, and the automaker’s chances of surviving and thriving are still low because of its low brand recognition. Considering these points, I continue to recommend that investors sell LCID stock.

My Lucid Stock Analysis

Over the last year, LCID stock has sunk 71%. As a result, the shares’ valuation is much more reasonable than it was in the past.

Meanwhile, Lucid, which currently only sells the expensive Lucid Air sedan, is working on a “midsize” EV. Likely to be launched in the second half of this year or early 2025, the EV is slated to cost around $50,000 and compete with Tesla’s Model 3 or its Model Y.

Although Lucid’s midsize EV, like the Air, will face intense competition and cost meaningfully more than the Model 3 and the Y, at least many more consumers will buy it.

And in late 2024, the automaker is slated to introduce its luxury Gravity SUV which is expected to seat six or seven passengers, start under $80,000, and have an impressive range of almost 450 miles “per charge,” according to Car and Driver.

As I’ve noted in the past, there are still few EVs that can seat seven people, and large EVs can save consumers a great deal of money on gasoline. With a starting price of less than $80,000, the Gravity will compete with many large, luxury EVs.

For example, Rivian’s R1S starts at over $85,000 and BMW’s iX has a starting price tag of $88,000. And many of the cheaper electric SUVs, such as GM’s Cadillac Lyriq and Fisker’s (NYSE:FSR) Ocean, cannot seat six people, let alone seven.

Meanwhile, even though Lucid had to lower its deliveries target multiple times last year, its deliveries did wind up increasing 28% in 2023, suggesting that the automaker is at least making some progress. However, it should be noted that its deliveries did drop almost 12% in the fourth quarter versus the same period a year earlier.

Lucid Is Still Facing Significant Hurdles

My top reservation in the past about Lucid was its lack of brand recognition, and I’m still not convinced that the automaker has overcome that challenge.

Meanwhile, with LCID stock changing hands at a trailing price/sales ratio of 9.5, the shares remain very expensive. And even its enterprise value/revenue ratio, which considers the company’s vast cash reserves of $4.4 billion, a very high 8.3 times.

Given these points, I believe LCID stock will drop much more in the coming months, continuing to make it a sell in my book.

On the date of publication, Larry Ramer held a long position in RIVN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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