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Lucid stock rebounds despite uncertainty surrounding SEC subpoena

Lucid stock rebounds despite uncertainty surrounding SEC subpoena
Jordan
Major
7 months ago
5 mins read

Lucid Motors (NASDAQ: LCID) finished trading on Wednesday at $44.72 +1.91 (3.78%), although it is down -6.12 (-12.03%) over the past five trading sessions.

Overall, it was a mixed day for the electric vehicle (EV) industry, which has been seeing some choppy trading lately. Over the last five days, the sector has been impacted by the current sell-off in growth stocks, which has seen Lucid drop more than 12% of its value.

LCID looked to be on its way to yet another losing day until the price rallied towards the closing bell, bucking the company’s previous decline and turning the day around for shareholders.

Lucid chart analysis

In the last month, LCID’s price has traded between $38.06 and $57.75, and it is now trading at the lows of this wide range. Meanwhile, current trading levels for LCID are in the center of its 52-week trading range.

The S&P 500 Index, on the other hand, is now trading around new highs, indicating that LCID is lagging behind the market, although Lucid’s stock price has increased by more than a threefold year to date.

LCID 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

While Lucid is barely below its 20-day simple moving average, which investors typically consider as uptrend indications, when you zoom out, LCID is above its 50-day SMA line by 124%, indicating that the stock had been on an uptrend until Lucid’s shares fell following the news around the SEC.

Prices have been decreasing precipitously recently, and it is best to avoid taking any new long holdings at this time, although above the current price; there is very little resistance to overcome.

Lucid closes in on Ford

The firm has received a great deal of attention since it went public earlier this year due to its merger with a special purpose acquisition company (SPAC). Although the EV manufacturer just began selling its first batch of cars in late October, it has already amassed a market capitalization of more than $74 billion.

As a result, the company’s now worth nearly as much as Ford (F). Lucid expects to generate $2.2 billion in sales in 2022 by shipping 20,000 vehicles; the projected revenue is more than thirty times less the firm’s current valuation. 

Similarly, Tesla (NASDAQ: TSLA), which sold 627,350 automobiles during the first three quarters of 2021, has a considerably larger market capitalization of $1 trillion, but its stock trades significantly higher than the number of vehicles shipped this year.

Why Lucid stock may be considered bullish

Lucid has put together a high-performance luxury electric vehicle with a long-range and quickly rechargeable. Bulls assert that Lucid will meet its production objectives and continue to develop next year. 

Aside from that, Lucid’s Air cars have a range of 520 miles on a single charge, which comfortably outpaces the range of Tesla’s longest-range vehicle (the Model S Long Range) by more than 100 miles.

When Lucid released its third-quarter financial report in November, it said that it had produced less than a million dollars in sales since it had not yet begun delivering its cars at the end of the quarter and that it had recorded a net loss of $1.5 billion. 

Despite that, the company said that it had exceeded 13,000 bookings at the end of September and also stated that the amount has subsequently increased to more than 17,000 on top of expected bookings of more than $1.3 billion. 

Those figures clearly suggest that Lucid will be able to meet its revenue projections next year, provided that manufacturing runs smoothly and there are no significant supply chain delays. 

Finally, an annual production capacity of 34,000 automobiles is now available at Lucid’s manufacturing facilities in Arizona (AMP-1). Also, the company has just begun Phase 2 of the AMP-1 expansion, which will increase the facility’s yearly capacity to 90,000 vehicles. 

Lucid also detailed its ambitious international development plans, which will begin with Canada in the fourth quarter of 2021 and include expansion into Europe, the Middle East, and Africa in 2022, as well as China in 2023.

Why Lucid witnessed a 12% drop

According to the bears, Lucid will have difficulty meeting its production goals and competing in an already saturated electric vehicle market.

Whatsmore, on December 6, Lucid said that it had received a subpoena from the Securities and Exchange Commission (SEC), which appears to concern its SPAC-backed reverse merger, as well as “certain projections and statements.” 

Other than that, Lucid stated it was “cooperating fully with the SEC in its review” and did not provide any other information. However, although the subpoena does not imply that Lucid committed any wrongdoing, the continuing investigation may limit the stock’s near-term upside potential.

All in all, whether the company’s current reservation numbers and promising development plans more than compensate for the potential negative publicity from a potential SEC probe remains to be seen.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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Jordan Major
Author

Jordan is an investor and market analyst. He's passionate about stocks, ETFs, blockchain, and digital assets. At Finbold.com, he delves into the technicalities to obtain future trends for new market traders and gives insights into user-friendly platforms for beginners.

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