Lucid Motors (NASDAQ: LCID) has had a rough week, with shares closing at $2.63 on Friday, down -0.060 (2.23%) for the day and -22.19% over the past five trading sessions.
The luxury electric vehicle (EV) maker, which currently holds a market cap of $7.6 billion, is trading near the lower end of its 52-week range. With the S&P 500 nearing all-time highs, Lucid’s sharp decline stands in stark contrast, leaving investors wondering whether this is a buying opportunity or a signal to stay on the sidelines.
In the past month, Lucid has been fluctuating between $2.55 and $3.73, a wide trading range, with the stock now hovering near its recent lows. The significant drop in price, combined with an uptick in trading volume, is typically a bearish signal, and we caution against taking new long positions while the stock remains in freefall.
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Based on weekly time frame analysis, the next major support level appears to be around $2.44.
Lucid stock offering sparks concern
One of the catalysts behind Lucid’s recent struggles is its plan to sell 262.4 million shares of its common stock to the public, a move announced late Wednesday.
The proceeds from this offering are intended for general corporate purposes, such as capital expenditures and working capital. At the same time, Lucid’s largest shareholder—Ayar Third Investment Co., an affiliate of Saudi Arabia’s Public Investment Fund—will purchase an additional 374.7 million shares in a private placement. This dual offering allows Lucid to raise capital while ensuring its largest investor retains its ownership stake.
However, the announcement sent Lucid stock plummeting nearly 18% in Thursday’s trading session. The public offering, to be handled by BofA Securities, will see shares sold through various methods, including market trades on the Nasdaq.
RBC Capital Markets analyst Tom Narayan expressed skepticism over the timing of the offering, especially after Lucid had previously indicated it wouldn’t need to raise additional capital until 2026.
“Investors will wonder why LCID is raising more capital just after it secured the PIF capital in August, and at currently depressed share price levels. We expect Lucid shares to trade sharply lower as a result,” Narayan noted in a recent investor report. He expects Lucid shares to remain under pressure in the near term as a result.
Lucid’s Q3 performance: A glimmer of hope?
Despite the recent stock decline, Lucid did outperform market expectations in its third-quarter delivery numbers. The company delivered 2,781 vehicles in Q3, surpassing the 2,242 vehicles forecasted by analysts surveyed by Visible Alpha. Increased demand for its luxury EVs, boosted by discounts and favorable financing options, helped Lucid weather the uncertainty of the current economic climate.
But while the company’s Q3 performance is encouraging, the question remains: will Lucid’s capital raise undercut its momentum?
Analyst downgrades and price targets
Amid the turmoil, some analysts have adjusted their ratings and price targets for Lucid. On October 10, Baptista Research downgraded Lucid from “Outperform” to “Hold,” despite raising its price target from $3.00 to $3.80.
The most recent price target on October 17, BofA Securities maintained a Neutral rating on Lucid, with a price target of $3.40. The firm acknowledged Lucid as one of the more promising companies among startup EV manufacturers, but remained cautious about its near-term prospects. Analyst John Murphy slightly adjusted his target from $3.55 to $3.40, signaling a modest outlook.
With Lucid trading near its 52-week lows and facing pressure from both the stock offering and concerns over capital needs, buying the dip may be tempting for risk-tolerant investors. However, the stock’s continued downward momentum, combined with analyst skepticism, suggests caution is warranted.
