Is Lucid Stock a Buy? Probably Not!

Is Lucid Stock a Buy? Probably Not!

Is Lucid Stock a Buy: LCID IPO

Lucid Motors was valued at $24 billion when Churchill Capital IV, a special-purpose acquisition company (SPAC), announced a proposal to take the business public in February. Lucid Motors CEO Peter Rawlinson stated that the business is going public in order to advance into the next chapter of our growth. On July 26, Churchill Capital Corp. IV launched the Lucid Motors IPO, bringing the luxury electric vehicle leader public in a much-anticipated initial public offering. On July 26, Lucid Motors stock started trading on the Nasdaq under the ticker symbol LCID.

Is Lucid Stock a Buy: The Overseas Expansion

LUCID plans to extend its operations in Saudi Arabia and neighboring nations. Only Few electric vehicle manufacturers are pursuing the Middle Eastern market by constructing a manufacturing facility there. Lucid may have an advantage over other businesses importing automobiles into the Kingdom. Lucid will also be able to access markets in adjacent countries. This new manufacturing plant is expected to bring in up to $3.4 billion in financial advantages over the next 15 years, according to the business. Lucid had reached an agreement with the Saudi government to construct a facility capable of producing 150,000 vehicles per year. Ayar, a Saudi Arabian Public Investment Fund affiliate, owns roughly 62 percent of Lucid Group.

Lucid is also expanding its Arizona facility from 34,000 to 90,000 units. By the end of 2023, the increased capacity is projected to be operational. Lucid will require a large sum of money as it continues to grow. Fortunately, it has it on its balance sheet as well as through its PIF support. That’s a strong combination.

Read: Lucid Stock Forecast

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Is Lucid Stock a Buy: LUCID Air and Reservations

According to Lucid Motors, deliveries of the Lucid Air – a high-performance, ultra-efficient luxury EV car — began in late October 2021. In 2023, the business plans to release its Gravity performance luxury SUV. In late September, the company started production of Lucid Air. The first fully loaded Air will cost roughly $160,000, Lucid also plans to introduce lower-priced versions as well, with a $70,000 version expected to be available in 2022.

The Lucid Air Grand Touring, Touring, and Pure variants are now accepting reservations. The Pure version will be available for less than $70,000, compared to $139,000 for the Grand Touring and $169,000 for the Dream Edition. Reservations may rise once the company begins deliveries of the less expensive Pure variant.

Lucid’s first electric automobile, the Lucid Air Dream Edition, drew a lot of attention. The model, which is aimed at the premium car market, combines great performance, a long range, and a stylish design.

More than 25,000 reservations have been made for various versions of the company’s Air sedan, up from 17,000 in mid-November. This is a 47 percent rise. If these reservations are turned into orders, this could result in sales of more than $2.4 billion.

Is Lucid Stock a buy: Factors impacting the stock price

  • Ukraine Crisis: Russia Ukraine Crisis has imapcted the stock market anyhow and the stock. Lucid was also trading below 200-day moving average, like its rivals Tesla and Rivian. As Russia is one of the biggest producers of Nornickel used in EV batteries, the conflict has raised the price of lithium-ion battery cells and nickel and alimunium prices which will impact cost of production.
  • Cost Pressure: While the company has raised enough funds, there can be instances of cash requirement and the company wants to maintain cash-flow positive status. Increasing interest rates can impact the cost of financing in case required and put pressure on cahs-flows.
  • Inflation: US is facing inflation pressure and while it has not impacted the prices yet, in a recent interivew CFO of the company Sherry House said that they are ‘definitely studying prices’ to pace up the cost increase.

Is Lucid Stock a Buy: Conclusion

LCID stock is currently trading less than $25 a share. LCID stock has fallen below $20 on two times in the last 52 weeks. On both of those occasions, the stock quickly recovered and rose beyond $20. The company reported disappointing fourth-quarter profitability and slashed its output forecast for 2022 by up to 40%. Due to “supply chain and logistics issues,” the company now expects to deliver only 12,000 to 14,000 automobiles, down from 20,000 before.

With the company’s expansion and more reservations, Lucid has a positive long-term outlook. Lucid Motors’ stock is currently trading at a loss of more than 60% to its 52-week high, indicating that it is not at a good time to buy. Despite the fact that the company has no revenue, it is still losing money. Analysts feel it is not a good time to invest in LUCID Motors.

-Rakesh Atla

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