Investing

Lucid Is a Penny Stock

Douglas A. McIntyre

Published: March 21, 2024 7:05 am

Shares of Lucid Group Inc. (NASDAQ: LCID), the small maker of electric vehicles (EVs), have dropped 84% in the past year to $2.70. It has become a penny stock, based on the traditional Wall Street measure. It is a sign of Lucid’s desperate situation and the lack of belief it can recover.

Lucid’s problems fall into several categories. The first is that EV sales across the industry have slowed. This is true for companies that range from Tesla to Ford. Consumers have turned to hybrids because they have small gasoline engines that improve their range without recharging. Complaints some consumers have about EVs include the small number of charging stations nationwide and the range of batteries, which can be less than 300 miles. (See the 25 best-selling electric vehicles of last year.)

Some analysts have commented on the chance that Lucid can be a leader in the EV sector. Stifel analyst Stephen Gengaro recently said that Lucid’s weak guidance for 2024 unit sales was “lackluster.” Baird analyst Ben Kallo sent a note to clients that said, “We continue to believe in LCID’s technology, but see 2024 as a difficult year with high interest rates and a high price point for LCID’s vehicles.” Famous stock picker Louis Navellier recently wrote that Lucid’s stock could drop to $1 a share.

Lucid’s 2023 financials were a disaster. Revenue was $595 million for the year, down from $608 million in 2022. The company’s net loss was $2.8 billion, compared to a loss of $2.6 billion in 2022. And Lucid said it would produce only 9,000 vehicles this year.

Based on its cash burn, Lucid has less than two years to turn itself around, and the pace at which it is producing vehicles is not fast enough.