Lucid Shares Collapse

By Douglas A. McIntyre Published Jul 16, 6:40AM EDT

Lucid Shares Collapse — © hapabapa / iStock Editorial via Getty Images

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After a recent run, Lucid Group Inc. (NASDAQ: LCID | LCID Price Prediction) stock has reversed course.
Tiny production numbers suggest the EV maker will have to raise money again soon.

After a surge triggered by management’s comments that its $1 billion deal with the Saudi Arabia Public Investment Fund had started to yield results and posting production numbers slightly better than expected, Lucid Group Inc. (NASDAQ: LCID) posted a sharp sell-off that took the stock down by almost 16% in a single trading day. Investors may have examined the recent news and found nothing truly encouraging.

The Trouble With Lucid

Lucid has lost its way.

While investors liked Lucid’s second-quarter production numbers at first, those numbers were tiny. Production totaled 2,110, and deliveries hit 2,394. These are not enough to show that Lucid can break even anytime in the foreseeable future. That means it will need to raise more money, which could cause dilution and cause the stock to sell off further.

Lucid announces quarterly results on August 5 and will post another loss in the hundreds of millions of dollars. In the most recently reported quarter, revenue rose from $149 million in the year-ago quarter to $172 million. Its operating loss was $772 million last year and $730 million in the recent quarter. At its current burn rate, it needs more money.

Lucid faces the same barriers as every EV maker. Many buyers are worried about the distance EVs will go on one charge, the number of charging stations, and the price of the cars. Lucid certainly has a price challenge. The price range of Lucid’s vehicles is $70,000 to almost $90,000. Experts say the EV market can only grow if prices drop to $25,000. Major car companies, including Tesla, plan to come to market with vehicles in that range. Even at high prices, Lucid is up against EVs from BMW, Mercedes, Porsche, and Cadillac. (See the top 10 EV brands right now.)

Eventually, and probably soon, Lucid’s unit sales will need to rise to the tens of thousands each quarter. Today, it is not even close.

Be sure to grab a copy of our “The Next Nvidia” report if you are looking for more great stock ideas.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.