Lucid fall in stocks: is it time to buy?
A a lot has happened since Lucid Group (NASDAQ:LCID) went public in July 2021. Its Air Dream Edition with 520 miles became the longest-range electric vehicle (EV) yet and drew rave reviews once it hit the road in late October. With the company also increasing its production capacity, shares of Lucid rose 280% in 2021.
In the last three months, however, the stock has lost more than 50% of its value, partly due to the massive sale of growth stocks and largely due to a subpoena from the Securities and Exchange Commission (SEC) in December regarding its merger with a special purpose acquisition company and unnamed “projections and statements”. (There has been no update on the issue from the SEC.)
Clear-headed investors have since pinned all their hopes on its fourth-quarter numbers and outlook to help the stock bottom out and rebound. Instead, the earnings report sent the stock plunging even further, with its share price dropping 19% at one point this morning.
The big question now is whether Lucid’s numbers and outlook warrant such a knee-jerk reaction or whether the market overreacted and in doing so presented you with a golden opportunity to buy the once-hot EV stock before. that it does not rebound?
Before jumping to conclusions, here are Lucid’s most crucial numbers you need to know.
Reservations: Lucid had secured more than 17,000 reservations on all of its four models (Air Dream Edition, Air Grand Touring, Air Touring and Air Pure) by mid-November. As of February 28, Lucid’s reservations exceeded 25,000 units, worth more than $2.4 billion in potential sales.
Deliveries: Lucid began deliveries of the Dream Edition at the end of October. As of Feb. 28, it had delivered over 300 units, with 125 units coming in 2021. Investors had higher expectations given that Lucid previously said it plans to start deliveries of other models only after delivering 520 Dream. Editions.
Production: This is by far the most important number investors focus on, as an EV maker’s ability to produce at scale and its rate of production are two of the biggest advantages to have in such an industry highly competitive. Through November, Lucid was confident of producing 20,000 vehicles in 2022 as it ramped up production at its Arizona plant. It now expects to produce just 12,000 to 14,000 units this year as it navigates supply and logistics challenges.
To be fair, Lucid isn’t the only electric vehicle startup to fall short of its production estimates. Rivian Automotive (NASDAQ: RIVN), whose first electric truck also won accolades, such as Lucid’s first electric car, is just one of the other companies to miss its mark. Additionally, Lucid isn’t the only automaker facing supply constraints.
Above all, its booking figures are solid. Additionally, during its fourth-quarter earnings conference call, Lucid said reservations for its second most expensive model after the Air Dream Edition, the Grand Touring, were higher than its two least expensive trim packs. Dear. Lucid has also confirmed plans to set up a factory in Saudi Arabia, a country with which it has close ties.
I’d like to believe that Lucid is prioritizing quality over quantity when it comes to production right now, and its revenue could steadily increase once the dust settles on the supply chain. As that happens, Lucid’s stock could be in the limelight once again.
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Neha Chamaria has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.