Lucid Motors (NASDAQ: LCID) began the year with a stock price of $7, and it has experienced an almost 32% decline in the time of reporting.
The electric vehicle (EV) producer reported disappointing Q3 2023 financial results on November 7, which didn’t meet Wall Street expectations. The announcement led to a sharp drop in the stock value, primarily attributed to a loss of $630.9 million in Q3.
Following this announcement, LCID’s stock dropped to $3.76 per share, marking an almost 20% decline. But it’s slightly recovered and is currently trading at $4.20, just below the trendline price resistance of $4.29.
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However, despite the challenges, some analysts are maintaining a ‘Hold’ rating for the stock.
LCID is not out of the woods yet
The company’s challenge has been compounded by negative press coverage, including a report in The Wall Street Journal that Lucid loses $227,000 on each car it sells.
Despite the difficulties, Lucid has been hoping that its new electric SUV Gravity and a strong balance sheet will turn things around. Gravity is expected to be a direct competitor to Tesla’s (NASDAQ: TSLA) Model X, and to have a range of over 400 miles as well as a 0-60 mph time of under 2 seconds.
Lucid’s balance sheet is relatively strong, with a debt-to-equity ratio of 0.22, indicating that the company has more equity than debt. This is a crucial indicator of the company’s financial stability.
It also has a current ratio of 1.46 and a quick ratio of 0.93, both of which are well above the industry benchmarks of 1.0 and 0.5, respectively.
These ratios indicate that Lucid has sufficient liquidity to meet its short-term obligations. However, Lucid will need to reduce the production cost of its vehicles, which should potentially lead to profitability.
What do the experts think?
A synthesis of projections from 8 analysts on TipRanks over the previous quarter indicates a 12-month average price target of $5.21 for Lucid.
This suggests a potential upside of 24.05% from its current price, leading to an overarching ‘Hold’ recommendation. Based on the last three months’ rating, LCID has received 1 ‘Buy’ rating, 6 ‘Hold’ ratings, and 1 ‘Sell’ rating.
The highest price target for the stock is $7, meanwhile the lowest price target is $2, below the current price of $4.26.
While Lucid faces challenges, the potential for recovery and growth remains a point of interest for investors.
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