After spending months on a major decline despite several – apparently unsuccessful – attempts to stop the downfall, such as a $10,000 cashback program implemented in 2023, and hitting an all-time low in January, the electric vehicle (EV) maker Lucid Motors (NASDAQ: LCID) has seemingly found a way to save itself from a complete stock market crash.
Indeed, near the end of January, Lucid’s shares suddenly spiked from $2.65 to $3.36 – more than 25% in but a few hours – and the shares have mostly continued rising since.
Although the company is down a staggering 63.70% since its initial public offering (IPO), 64.80% in the last 52 weeks, and 13.49% since January 1, the change in trajectory – which saw Lucid rise 24.65% in the last 30 days, and 13.25% in the last 5 trading sessions – reignited investor optimism.
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Still, at $3.59 per share, the firm remains well below its previous highs and the formerly hoped for $20 but might again have a shot at finally reaching $5.
Why is Lucid rallying?
The main driver of Lucid’s late January surge was an announcement of a comprehensive agreement with a Saudi government-owned aluminum producer – Ma’aden Rolling. The agreement will see the EV maker – also majority-owned by the Saudi sovereign fund – receive a steady supply of high-quality material paramount for vehicle manufacturing in the next 3 years.
Lucid has also recently unveiled several other programs and partnerships that have seemingly increased investor confidence.
The first of these is a new and attractive leasing scheme in Saudi Arabia which would require customers to pay only 50% of the cost upfront. The second is a deal with Saks, a luxury commerce platform, that will allow potential customers to get access to demonstrative driving runs of the Lucid Air model.
Additionally, the CEO of Nadlib Lucid factory stated in an interview posted on X that his plant will produce between 5,000 and 10,000 cars in 2024 and will aim to reach 150,000 vehicles annually in the next five years.
Recent 13-f filings also show that there has been an increase in institutional interest for the resurgent EV maker as the Principal Financial Group, an investment management and insurance company, increased its position and holds LCID stock worth approximately $327,000.
Can Lucid climb to $5?
Despite the recent surge and positive developments, Lucid’s ability to climb back to $5 per share remains uncertain. A major reason for this is the overall state of the EV industry, which has, of late, been suffering from declining demand and increased competition.
Generally, major electric vehicle manufacturers, including Tesla (NASDAQ: TSLA), Rivian (NASDAQ: RIVN), and Nio (NYSE: NIO), have all declined significantly in the second half of 2023 as well as in the first month and a half of 2024.
Additionally, while Lucid has, in many ways, spearheaded the current rally, its surge was accompanied by a rise for its competitors.
The mounting concerns over the ‘EV winter’
As a whole analysts are – at least in terms of price targets – still bullish on the EV industry, generally forecasting 12-month upsides of 40% or even 90% for companies in the sector.
Still, on Monday, Rivian received a major downgrade in the leadup to its upcoming earnings report, and some experts believe that firms like Tesla might soon crash to as little as $23 per share.
Lucid might also soon face issues on the business side as the National Highway Traffic Safety Administration (NHTSA) has opened an investigation into a Lucid Motors windshield defroster recall from January, saying it’s “concerned” the company’s over-the-air update solution doesn’t go far enough to fix the problem
Ultimately, Lucid is likely to surge above $5 or lose its chance to do so in the foreseeable future on Wednesday, February 21, when it publishes its next earnings report.
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