Recent enhancements to the macroeconomic outlook have instilled confidence among investors, pointing towards a potential preference for riskier assets, particularly stocks, in the upcoming twelve months.
Bolstering this sentiment are the Federal Reserve’s recent announcements of plans for three rate cuts in 2024, marking the first such moves since 2020.
This optimistic backdrop has ignited hopes of a rally in speculative growth sectors, including electric vehicles (EVs). Against this backdrop, can the embattled EV maker Lucid Motors (NASDAQ: LCID) return to winning ways?
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EV demand may increase but will it be enough for LCID?
While easing macroeconomic pressures are likely to increase investors’ appetite for stocks in the coming year, the potential bull market is unlikely to be an all-encompassing one.
There’s a strong argument to be made that investors are more willing to factor future tailwinds into current prices, but fundamentals are still seen as a vital factor. With that in mind, Lucid has a lot of work to do to regain investors’ trust.
The company’s deliveries and sales numbers took a significant nosedive in 2023, missing Wall Street’s estimates several times. In its Q3 2023 report, the automaker posted a net loss of $631 million, marking a 19% increase year-over-year.
Further, Lucid revised its production forecast for the year once again, slashing the full-year goal from 10,000 units to just 8,000-8,500.
It is safe to say that even if lower interest rates help raise EV demand, Lucid still has a great number of issues to address. For instance, heavy losses and cash burn are likely to persist at the company despite a potential jump in overall sales.
For that reason, there is little chance that LCID could see a sustained upside in 2024 without only substantial improvements in its fundamentals.
On a more positive note, shares of Lucid gained some traction earlier this month after the company said it has assembled nearly 800 cars in its Saudi Arabian factory since its opening.
Lucid stock price analysis
The challenges in Lucid’s business have been clearly reflected in the 2023 stock price trajectory.
At the time of publication, the company’s shares are sitting at $4.34, up 1.88% in the past 24 hours.
Over the past week, the stock fell almost 9%, and roughly 30% since the start of the year. LCID exhibits a notable support level at $4.31, as indicated by a trend line on the daily time frame. On the upside, it faces a significant resistance level at $4.78, indicating an area where selling pressure may increase.
With that double-digit decline, LCID is broadly underperforming the EV sector. Industry giants such as Tesla (NASDAQ: TSLA) gained 137% during that period while Rivian (NASDAQ: RIVN) surged 36%.
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