Lucid Motors‘ (NASDAQ: LCID) stock has experienced a pronounced downward trajectory in recent months, reaching an all-time low in October.
The decline is attributed largely to the automaker’s disappointing delivery and production figures, notably evident in its most recent quarterly performance.
With the company’s future increasingly uncertain in the competitive electric vehicle (EV) market, investors are grappling over whether the diminished valuation presents a buying opportunity or a red flag.
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Disappointing Q3 deliveries and full-year guidance
To determine whether LCID is a good buy at the moment, first, let’s take a glance at the company’s numbers.
In October, the automaker reported Q3 production and delivery results, which were below Wall Street’s estimates by some distance. The company delivered just 1,457 Air Sedans in the quarter, well below the anticipated 2,000 vehicles.
Comparatively, these figures reflect Lucid’s struggles in ramping up production and meeting market expectations, especially when contrasted with competitors in the EV space.
Lucid produced 1,550 Airs during the quarter, saying more than 700 additional cars were in transit to a new facility in Saudi Arabia, arriving for final assembly. This figure was notably lower than the 2,173 built in Q2 and the 2,282 reported in the year-ago period.
A month later, Lucid unveiled its complete Q3 financial report and it offered no reassurance to investors.
The automaker missed revenue estimates and reduced its 2023 production outlook even further. Lucid’s revenue fell 30% year-over-year in the quarter and was short of consensus estimates of $185.1 million.
The company reduced its production forecast for the year from 10,000 units to just 8,000-8,500.
One slight positive from the report was that the EV maker’s net loss per share attributable to common stockholders narrowed from $0.4 last year to $0.28, while analysts were expecting a loss of $0.36. Overall, the company lost $631 million in the quarter, marking a 19% increase from a year earlier.
Should investors avoid LCID?
Lucid’s current situation offers few positive aspects, and the prospects for a turnaround in the near future seem bleak.
This bearish sentiment has been reflected in recent analysts’ coverages. This week, analysis at Needham downgraded LCID’s rating to ‘Hold,’ and cut estimates on the stock following the Q3 report.
“We downgrade LCID to Hold, ultimately not having enough faith in near-term demand to drive unit volumes.”
– the experts said in a note.
According to them, the auto manufacturer is currently facing different demand-related challenges, offsetting an optimistic outlook on Lucid’s technological advantage over some of its competitors.
Further, production of Lucid’s upcoming Gravity SUV will not begin before late 2024, and Needham strategists were not confident that investors would put much faith in reservation metrics if the carmaker were to share them.
This is because “reservations for the [Lucid] Air Sedan didn’t materialize into vehicle orders at hoped-for rates, ultimately making the Gravity SUV a show-me story in a show-me stock, with minimal concrete proof points in the near term,” the experts stated.
Wall Street’s consensus estimates
When it comes to consensus Wall Street’s estimates, the average 12-month price target for LCID sits at $5.21, implying a potential upside of more than 25% from its current levels.
The overall rating on the stock is a ‘Hold’, based on one ‘Buy’ rating, six ‘Hold’ ratings, and one ‘Sell’ recommendation that LCID garnered in the past three months.
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