Lucid is Amplifying Its Speed. Worth Investing in Its Shares Presently?
If you've been keeping tabs on the electric vehicle (EV) sector, it's been a rollercoaster ride so far. Certain international marketplaces are skyrocketing at a faster pace than North America, particularly when focusing on China, where recent monthly EV sales account for more than half of all new vehicle sales. Lucid (LCID shedding 7.45%) is particularly gaining traction, seemingly stealing the limelight from its competitor Rivian, but is it a smart long-term investment for shareholders?
What have you been doing for me lately?
Lucid has a disappointing pattern of upsetting investors with production complications, delays, and below-estimated deliveries throughout its brief history. Regardless, management has successfully navigated those obstacles and handed in three consecutive quarters of record deliveries.
In fact, with Lucid recording three straight quarters of delivery records, the company has enabled consumers to take the wheel of over 7,100 Lucid EVs in 2024, already surpassing its 2023 total of 6,001 deliveries.
Despite the company's delivery progression, which will only escalate with the Gravity now up for sale, its stock value has been heading in reverse - even in comparison to Rivian, which posted a subpar third-quarter delivery result due to its own production predicament.
Stuck in reverse gear?
Lucid's progress with three consecutive delivery records was essentially balanced out by a mixed third-quarter result and the declaration that the EV manufacturer plans to sell more than 262 million shares in a public offering. If successful, the offering will also sell approximately 375 million shares to its majority shareholder, Saudi Arabia's Public Investment Fund (PIF), further strengthening the company's ties to Saudi Arabia. Source
It's not unexpected for investors to express this sentiment, as we generally acknowledge that young EV manufacturers are likely to have to secure additional capital before the companies become self-sufficient. It's also reasonable to point out that Lucid's shareholder dilution is more pronounced compared to Rivian, as a corresponding example.
Should I buy Lucid now?
The silver lining is that the company's delivery progression is expected to persist moving forward. This is because Lucid's Gravity EV SUV has now hit the market and will begin contributing to deliveries in the near future. The execution of the Gravity launch and subsequent production ramp-up will be crucial for a strong end to the year and a powerful start to 2025 with sales momentum. Additionally, Lucid has plans to launch a midsize crossover priced under $50,000 before shipping, around two years from now.
The global EV sector appears to have a highly promising future as the world shifts from petroleum-powered vehicles to EVs, but early investors must comprehend how speculative and risky these stocks currently are. Just take a gander at Fisker's financial meltdown.
Lucid's current delivery progression isn't substantial enough to categorize it as a buy now, but it is sufficient to place Lucid on your watchlist as the company manages speed bumps, broadens its vehicle range, reduces costs, and attempts to establish itself as one of the leading EV players in an expanding industry. The company's stock price is hovering near its all-time lows and offers an engaging entry point for investors willing to tolerate the risk of owning Lucid. For those willing to assume that risk, stocks like Lucid should still make up a smaller portion of your overall portfolio.
Despite Lucid's delivery progress and the company's potential to expand its vehicle range and reduce costs, its stock price is currently at its all-time lows, making it an engaging entry point for investors willing to tolerate the risk. On the other hand, managing finance and investing in Lucid stocks should be done cautiously, considering the speculative and risky nature of young EV manufacturers like Lucid.
