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Is Lucid Motors a buy or sell?

Is Lucid Motors a buy or sell?

As hard as it tries to advance its business, the electric vehicle (EV) maker Lucid Motors (NASDAQ: LCID) has so far failed to meet investor expectations and has recorded loss after loss since its initial public offering (IPO) in 2021.

Last year, 2023, was in many ways particularly bad for the LCID as a company as, for example, its attempt to offset dwindling demand by offering a $10,000 cashback on new vehicles failed to prevent it from missing its delivery targets.

On the stock market, LCID shares experienced a mostly continuous decline, falling from approximately $6 at the start of 2023 – and a yearly high above $12 late in January 2023 – to slightly above $4 at the start of 2024. Additionally, in quick succession, Lucid Motors took two hits in Q4 as its stock was kicked off the Nasdaq 100 index, and its CFO decided to leave the company.

Lucid stock price chart

In 2024, Lucid stock’s downtrend continued – though the EV maker appeared to have gotten a reprieve in late January. For example, LCID shares are down 10.84% year-to-date (YTD), but the latest 30 trading days saw them surge 30.74%.

LCID YTD stock price chart. Source: Finbold

The most recent uptrend – including Lucid stock’s last close 0.54% in the green at $3.70 – appears to have come to an end with the extended session price changes. Indeed, by press time, LCID shares fell 9.73%, and should the decline persist in the leadup to Thursday’s market open, they will begin the day at their lowest since the end of January.

Should I sell my Lucid stock?

Given the strong and protracted downtrend Lucid stock has been experiencing and the broader state of the electric vehicle industry, which many have dubbed the “EV winter” due to the effects of a slowdown in demand and an increase in competition, it is unlikely that LCID’s February upturn will persist.

The bearish outlook is further corroborated by the price movements visible in the extended session between February 21 and 22.

Looking beyond investor confidence, Lucid might soon take a major hit on the purely business side as the U.S. highway authority recently opened a Recall Query (RQ) over malfunctioning High Voltage Coolant Heater (HVCH) in certain batches of Lucid Air vehicles.

All in all, it appears likely that the current price of LCID shares might soon turn into a many-month high for the firm.

Why is Lucid stock up in February?

While the situation for Lucid Motors can rightfully be described as bad, it is unlikely that the story of the luxury EV maker is over.

Indeed, Lucid has the backing of its majority owner – Saudi Arabia – and this fact is, to a significant extent, responsible for LCID stock price late January surge as the EV maker entered into a multi-year agreement with a local aluminum-producing company.

Additionally, despite the turmoil, Lucid has recently made several additional major partnerships and schemes, with a test-driving deal with Saks, an American luxury commerce platform, and a favorable leasing agreement in Saudi Arabia being the standouts.

What will Lucid be worth in 5 years?

Still, as the prominent event-driven trader Gurgavin Chandoke recently pointed out on X, the history of Lucid Motors is a history of broken promises. 

At the time of its IPO, Lucid promised investors it would deliver 49,000 CARS IN 2023 – and the actual figure came in closer to 6,000. Similarly, $5.3 billion in annual revenue in the same year while, in actuality, achieving $595 million. In total, LCID missed its own estimates by approximately 90%.

Ultimately, such circumstances render making a 5-year Lucid stock price prediction – or any such long-term prediction – for Lucid very difficult. 

On the one hand, it has the backing of a powerful and wealthy majority owner and operates in an industry expected to become huge in the coming years.

On the other, its history and its recent performance have been little other than disappointing, and it may just happen that Lucid Motors has already lost the fight against the bigger players in the sector, such as Elon Musk’s Tesla Motors (NASDAQ: TSLA) or China’s BYD (SHE: 002594).

Does Lucid Motors have a future?

The matter of whether Lucid Motors has a future – no matter its ultimate valuation – is somewhat different. While LCID’s performance since its IPO makes the question of “who is buying Lucid” natural, the EV maker still has its bulls. 

Analysts, for one, are still relatively optimistic for the company, and its overall rating on the stock analysis platform TipRanks is, at the very least, a “hold,” indicating that the experts believe it still isn’t over for Lucid.

The average 12-month price target for the company is also surprisingly strong given LCID stock’s price performance, and the average forecast would see Lucid’s shares climb to $5 – 35.14% above the press time price.

LCID analyst rating. Source: TipRanks

Finally, condemning Lucid Group after looking at its performance in a vacuum would be unfair given that the entire EV industry has been struggling and many of its most recognizable companies – Tesla, Nio (NYSE: NIO), BYD, and Rivian (NASDAQ: RIVN) – are all in the red in 2024.

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