Lucid (NASDAQ: LCID) is scheduled to announce earnings for Q1 on Thursday, May 5 after market close. The consensus earnings per share (EPS) is -$0.29 while the consensus revenue estimate is $55.56 million.
On April 26, LCID shares jumped 7% on the news that an additional deal was signed with the Saudi Arabian government. This deal included a commitment to purchase 50,000 vehicles with an additional 50,000 option.
The automotive industry is facing challenges like supply chain issues and chip shortages with an addition of a volatile market environment. Lucid is not spared in this regard as production volumes are expected to come in at a weak pace for the first half of the year.
Prepare for a weak showing
Pandemic era disruptions are yet to recover, the war in Ukraine and renewed Covid lockdowns in China have all unleashed fresh challenges to the fragile imbalance between supply and demand. Early production ramp-up amidst all of these challenges is likely to be very difficult and could end up creating a perfect storm for the company when it delivers its earnings numbers in the call.
On the other hand, more than 80% of companies in the S&P 500 have reported their Q1 for 2022 and they have managed to beat expectations, most of them surpassing the five-year average of 77%. Companies that missed estimates were severely punished, like Netflix (NASDAQ: NFLX) for example.
Near-term production and supply headwinds will probably influence the price and be the main focus for investors going into these earnings. Yet, the demand environment for electric vehicles (EV) is strong and will likely continue to improve.
Investors should likely brace for more price volatility in the short term, but could possibly expect LCID and other EV stocks to perform well in the long term, as long as production quotas, vehicle safety and performance reach the promised threshold.
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