Despite endless disappointment since its public market debut in 2021, some remain bullish about future prospects for Lucid Group (NASDAQ:LCID). One bit of recent news that may give LCID stock bulls some hope is the electric vehicle maker’s recent updates regarding its development of an electric SUV.
Following this announcement, shares made a temporary move higher, soaring from just under $7 per share to just over $8 per share. So far in May, the stock has slid back to prior price levels, and for substantive reasons.
For one, considering Lucid’s poor production and deliveries track record, it’s tough to be confident of success arriving quickly when its SUV model rolls off the assembly line. Second, there’s an event coming up that could spark the next big sell-off for shares.
| LCID | Lucid Group | $7.48 |
LCID Stock and New Vehicle Model News
On April 25, Lucid Group provided the public with an update on its efforts to bring an electric SUV to market. The company has just started testing out its Lucid Gravity model, in development since 2020, on public roads.
Aiming to launch the vehicle in 2024, based upon the headlines, you may think this is good news for LCID stock. Yet while it is not a negative that the EV maker continues to pursue expansion, I wouldn’t bank on Gravity taking Lucid from zero to sixty in terms of revenue growth. Not to mention, profitability.
At least, based on the lack of success Lucid has had with its first vehicle model. Not only has the company struggled to scale up production of its flagship Lucid Air luxury sedan.
As I have pointed out previously, Sales have continued to be very underwhelming. Deliveries and reservations have been trending lower.
This suggests that this brand is not catching on as an appealing alternative to market leaders like Tesla (NASDAQ:TSLA). Until the situation improves with the air, it’s questionable whether things will play out differently when the Gravity launches next year.
The Next Big Sell-Off
Well before Gravity could give shares a lift, there is a major event that could drive the next big LCID stock sell-off: the company’s quarterly earnings release, scheduled May 8 after the market closes.
Sure, the public is already well-aware of Lucid’s lackluster production and delivery numbers for the quarter ending March 31. With this, you may think that the prospect of an equally lackluster quarterly earnings report is already baked into LCID’s stock price.
However, while sell-side analysts have already walked back their revenue/earnings forecasts for the quarter, it might not be enough. Additional news/takeaways from the release may elicit yet another negative reaction by the market. For instance, Lucid could end up revising its 2023 production guidance.
Previously guiding for production of between 10,000 and 14,000 vehicles this year, a revised number could come in closer to the low end of this range. Lucid could also end up providing a revision to its cash runway.
If this is a downward revision, shares may move lower, on the expectation of higher-than-expected future dilution from additional capital raises.
Bottom Line
I’m not the only one who believes LCID is gearing up for a post-earnings plunge. InvestorPlace’s David Moadel recently argued that such an outcome is likely. Not only that, Moadel pointed out an important factor that could negatively affect Lucid’s fiscal performance in subsequent quarters. That would be competition from Tesla.
Following Tesla’s slashing of vehicle prices, would-be “Tesla killers” like Lucid at now at an even greater disadvantage.
Admittedly, I have my doubts that Tesla’s price cut gambit will pay off for the EV market leader. However, it’s easy to see how this aggressive move may result in further lackluster results from Lucid, and more declines for the stock.
The latest ‘Gravity’ news adds little to the story. Another sharp pullback is perhaps imminent. It’s best to avoid LCID stock at all costs right now.
LCID stock earns a D rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.