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Lucid stock soars 27% in a day; Is $5 next for LCID?

Lucid stock soars 27% in a day; Is $5 next for LCID?

While it is true that the entire electric vehicle (EV) industry has been suffering from a severe downturn, with even the giants like Tesla (NASDAQ: TSLA) reeling inside its longest losing streak since 2021, few have been as impacted as Lucid (NASDAQ: LCID).

In fact, Lucid has been on a rather sustained downward spiral since 2021 and has, throughout 2023, faced multiple setbacks, including failing to meet its own delivery targets and getting kicked off the Nasdaq 100 index – a stock market index that tracks the 100 biggest non-finance stocks listed on the exchange.

By mid-January 2024, the company even hit new all-time lows.

Things took a major turn on Monday, January 29, when the beleaguered EV maker’s stock made a meme-stock-like single-day rally of 27.17%. 

The move was not only curious in its own right but also caused investors to wonder if the new uptrend would be sustained or if the newfound pride came before an even greater fall.

Why did Lucid rally 27%

While the sheer scale of Lucid’s rally makes it something of a mystery, a consensus has since emerged that it was, at least in part, driven by a supply agreement with Ma’aden Rolling.

Ma’aden Rolling is a Saudi Arabian state-owned aluminum sheet manufacturer set to, according to its own post on X, supply the EV maker – whose majority owner is Saudi Arabia’s Public Investment Fund (PIF) – with high-quality material for at least 3 years.

It is likely that the multi-year nature of the agreement and the evident backing of the powerful Arab monarchy had a significant impact on investor confidence that Lucid will not – at least in the short term – be closing its doors.

Can Lucid reclaim $5?

Despite the major boost it received on January 29, Lucid’s future remains highly uncertain. The company has experienced a severe beating in recent months, and both its $10,000 cashback program and its delivery figures showcase that the demand for its vehicles simply isn’t sufficient.

Additionally, considering the scale of the Monday rally, it would be strange not to see at least some correction in the week bridging January and February – and indeed, by press time, the firm’s shares are down approximately 4% in Tuesday’s pre-market.

Finally, some experts like the Founder and CEO of GLJ Research, Gordon Johnson, believe that the EV market as a whole is a dead-end at the moment and even see Lucid’s arguably most successful competitor – Elon Musk’s Tesla – crashing by nearly 90% to $23.53 per share.

Still, it is worth remembering that Johnson’s forecast largely goes against the grain as it is generally believed that green energy and related industries represent the future of humanity.

Furthermore, despite the turmoil and troubles, the fact is that the world is currently grappling with numerous issues, including the effects of protracted high inflation and accompanying high interest rates, supply chain disruption in the Red Sea, mass layoffs in the technology sector, and other issues in several different fields.

Given Lucid’s penchant for innovation and a respectable fleet of EV models, the new partnership with the Saudi-owned company and the accompanying boost in investor confidence may give the firm the staying power it needs to weather the storm and reclaim old heights.

LCID price analysis

While LCID’s possible reclamation of $5 per share currently remains in the realm of forward-looking analysts and soothsayers, it is undeniable that the company has been struggling for several years.

Over the last 52 weeks, the company’s stock fell a worrying 71.32%. This year has, barring Monday, not given much cause for optimism as LCID declined a further 18.80%.

LCID YTD price chart. Source: Finbold

Finally, the company has also been doing poorly in the last week, and while it benefitted from its 24-hour rise of 27.17% to $3.37, it is approximately 4% down in Tuesday’s pre-market.

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