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Lucid stock set to crash below $4 amid missed targets for 2023

Lucid stock set to crash below $4 amid missed targets for 2023

It is no secret that Lucid Motors (NASDAQ: LCID) has been struggling throughout 2023. The price war initiated by Tesla (NASDAQ: TSLA) and BYD (HKEX: 1211), the overall decreased demand for electric vehicles (EVs), and the overall precarious situation in the economy have all taken a toll on the company. 

Lucid’s earnings report for the third quarter of the year continues the trend. The company managed to sell 1,357 vehicles in the three months, and its revenue amounted to $137.8 million – nearly $50 million less than the forecast of $183.4 million.

Perhaps the most striking element of the report is the newly adjusted production outlook for 2023 – 8,000-8,500 vehicles compared to the previously set 10,000. The number becomes even more striking when juxtaposed with the fact that the company – during its initial public offering (IPO) phase – estimated 500,000 deliveries in 2023.

Not all doom and gloom for Lucid

Despite the troubling numbers, Lucid still does not look entirely doomed. While the company has failed to meet expectations in terms of revenue and deliveries, it managed to beat the forecasts for per-share earnings – it recorded a loss of $0.28 instead of $0.35.

Additionally, the firm’s report also expressed satisfaction with the results of its marketing campaign seen throughout the third quarter, as it stated that the majority of the demand came from entirely new customers. Lucid also highlighted the opening of its new manufacturing plant in Saudi Arabia.

The EV maker’s chief financial officer (CFO) also said that the company is satisfied with the effects its cost control program has had so far. Earlier in November, Finbold reported that Lucid started offering $10,000 cashback on new purchases due to the high costs of its vehicles and to offset dwindling demand.

Finally, the EV maker announced on November 6 that it is adopting Tesla’s North American Charging Standard (NACS). The move represents a major improvement for Lucid’s customers as it gives them access to a network of approximately 15,000 charging stations across the country.

Lucid under significant pressure

The mix of the bad news and silver lining can hardly obfuscate the fact Lucid is, just like many other players in the EV industry, such as China’s Nio, under significant pressure. Despite the cashback program and the company’s consistently strong reviews, a major problem for the luxury car maker is the ongoing price war.

The pricing battle is likely to have an even greater impact on the demand for Lucid unless it manages to produce a model at a significantly more competitive price since Tesla, the best-known player in the industry, is set to start the production of a new car expected to cost only €25,000 – less than $27,000 at the time of publication.

All of these factors combined have investors worried that Lucid’s stock will continue its decline and reach new lows below $4 per share. Despite the continuous decline and the most recent report, the analysts’ forecast for the EV maker for the next 12 months remains somewhat optimistic.

Wall Street analysts’ average price target for LCID. Source: TipRanks

According to data accumulated by TipRanks, the average price target for LCID in 12 months stands at $6.87 – almost a 60% increase compared to the latest closing price. Additionally, even the most pessimistic analysts don’t expect Lucid to go below $4 – at least at the time of publication.

Lucid price analysis

While the analysts seemingly remain cautiously optimistic about Lucid’s future, the company continued its months-long decline well into November. At the latest Tuesday close, LCID stood at $4.30, meaning it had declined 0.46% within 24 hours. The numbers for extended-hour trading – occurring after the Q3 report was published – are even more worrying.

LCID 1-day price chart. Source: Finbold

After the market closed on November 7, Lucid entered into a further decline of more than 4% and stood at $4.12 – dangerously close to its all-time low. Looking at longer timeframes, the performance of the EV maker’s stock doesn’t look much better, as it had fallen 14.51% in the last months and 30.31% year-to-date (YTD).

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