Lucid Group (LCID) stock forecast: Accelerating to the top?
Hailing from Silicon Valley, the global centre for technology and innovation, electric vehicle (EV) manufacturer Lucid Group (LCID) was founded in 2007. The EV maker’s factory in Arizona is North America’s first purpose-built, greenfield EV facility. With an initial capacity to manufacture approximately 10,000 EVs annually, the facility has the functionality to produce over 300,000 cars with planned expansions.
Formerly known as Atieva, Lucid Group made its initial public offering on 26 July 2021 after merging with blank check company Churchill Capital Corp IV. The company’s first EV product, Lucid Air, hit the market later that year. It was the 2022 Motor Trend Car of the Year, regarded as one of the most prestigious awards in the automotive industry.
Peter Rawlinson, CEO and CTO of Lucid Group, commented on the company’s win:
Following the success of its first vehicle, Lucid Group announced its luxury SUV EV line up called Project Gravity. It is anticipated to hit the roads in 2024.
On 5 May, Lucid Group released its financial results for the first quarter of 2022 ended 31 March. The company has not remained immune to broader issues affecting the automobile industry, such as supply chain issues and Covid-related factory shutdowns in China. Since the start of this year, Lucid stock has plummeted by nearly 55% from $40.93 to its last close price of $18.96 on 8 June 2022.
The company remains hopeful of meeting its production targets of 12,000 to 14,000 vehicles for 2022. The latest Lucid stock news is that it is looking to branch out into European markets.
Join us as we undertake Lucid stock analysis and get analyst insights on LCID stock price predictions.
Lucid Group stock fundamental analysis: Q1 financial results
Revenue for the company was reported to be $57.7m, beating analysts’ expectations of $55.56m. Earnings per share (EPS) came in at -$0.05 – better than analysts’ expectations of -$0.29, based on data by Seeking Alpha.
Lucid Group completed customer deliveries of 360 Lucid Air’s in the first quarter. Its Air Grand Touring Performance Range was anticipated to be available for deliveries from June 2022. The Environment Protection Agency’s (EPA) estimated driving range for the Air Grand Touring of 516 miles and 1,050 horsepower (HP) means that the dual-motor EV is considered to be the most powerful electric vehicle currently available in North America.
Lucid Group has stated that it believes in concentrating efforts on increasing the miles/kWh over reducing battery costs. To achieve this, it invests in its research and development initiatives, reporting $186.1m for R&D expenses for Q1 2022 – 11% higher than its outlay of $167.4 in Q1 2021.
Lucid Group reported a nationwide presence through 40 body shops and 24 studio and service centres spanning across North America.
As the company scales operations, its selling general and administrative (SG&A) expenses grew 69% on the previous year – $131.7m in Q1 2021 compared to $223.2m for Q1 2022.
Lucid Group’s cash used in operating activities grew by 126% to account for costs associated with phase-2 of its EV production facility. The company reported $494.6m operating costs , up from $218.7m in Q1 2021.
With $5.4bn held in cash, Lucid Group believes it is adequately positioned to fund operations into 2023. The company anticipates capital expenditures to reach the $2bn mark. Lucid has also announced increased prices for most models beginning 1 June 2022.
Rawlinson commented on the price hike:
Accelerating Phase-2 operations and Saudi Arabia Vision 2030
Lucid’s core EV technology is designed in-house and manufactured at its Arizona facility. Making use of vertically integrated production processes, the company manufactures its own electric motors, battery packs and transmission systems.
Phase-2 of its Casa Grande facility operations is currently underway. It’s expected to boost the company’s capacity from 34,000 to 90,000 units per annum. Lucid Group also hopes to add 2.85 million square feet to the manufacturing site to account for production of its SUV Project Gravity line-up in addition to catering to existing Lucid Air demand.
In alignment with growing demand for its products, Lucid Group announced an agreement with the Saudi Arabian government for 100,000 of its vehicles, delivered over a 10-year period. On 26 April, the EV maker reported a formal pledge undertaken by the Saudi Arabian government to purchase Lucid Air and future models, with an initial commitment to purchase 50,000 vehicles and an option for another 50,000.
This marks one of the biggest-ever purchase agreements in the domain for sustainable electric vehicles. It’s part of Saudi Vision 2030, whereby the kingdom is looking to bring active changes in transportation and technologies through sustainable measures.
On 18 May, Lucid Group hosted a signing event for the construction of its first-ever international production factory in Saudi Arabia. With a capacity to manufacture 155,000 EV units, this world-class facility would be built through financial support and incentives up to $3.4bn over the next 15 years, backed by the government of Saudi Arabia.
The minister of investment of Saudi Arabia, Khalid Al-Falih, commented on the agreement:
Catching up to European markets
Aiming to solidify Lucid Group’s position as a global EV brand, the company is looking to expand operations into Europe. In a 10 May press release, it announced its first European retail location would be initiated in Munich, Germany.
As of June, Lucid Group is accepting reservations for its EVs from customers across several European nations, including Austria, Denmark, Belgium and the Netherlands. By extending a refundable token amount starting at €300 ($321.90), European buyers can reserve Lucid Air Pure, Touring and Grand Touring models until deliveries begin in their countries.
The Lucid Group anticipates opening additional studios and service centres across its targeted European countries and the UK in the coming years.
Lucid stock forecast and analyst insights
As of 8 June, data compiled by TipRanks showed that of three analysts covering the stock, two rated it a ‘buy’ while one suggested ‘sell’. Analysts’ LCID stock price target ranged from $12 to $45, averaging at $31.
Forecasting service Wallet Investor predicted that the Lucid stock future price could reach a high of $24.619 by December 2022. In its Lucid Motors stock predictions for 2025 to 2026, it anticipated the price to close at $49.390 and $57.352 by the end of each year, respectively.
By January 2027, 5 years from now, Wallet Investor’s projected stock price for LCID was in the range of $57.511 to $58.461.
Itay Michaeli, from Citi Group, set a $57 price target on LCID stock, saying:
Bank of America analyst John Murphy tagged Lucid Motors as a combination of Tesla and Ferrari and had stock expectations of $30 on LCID. Charles Coldicott from Redburn went a step ahead and said that Lucid’s Air Sedan in addition to being the longest-range EV is “ahead of Tesla’s product in some other areas”.
Several equities analysts have issued research reports on the Lucid stock value in 2022. On 3 March 2022, Morgan Stanley lowered the price target to $12 from $16 and maintained its ‘underperform’ rating. BNP Paribas Exane initiated its coverage on Lucid Group stock on 11 April 2022 and gave it an ‘outperform’ rating. After Lucid Group announced its Q1 2022 financial results, Citigroup lowered its price target to $36 from $45 but maintained a ‘buy’ rating.
When looking at Lucid Group’s stock potential, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Long-term forecasts are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results. Whether you should invest in the Lucid stock market depends on your personal investing goals and portfolio composition.
FAQs
Is Lucid a good stock to buy?
While the Lucid stock has plummeted down by almost 55% year to date, its Q1 2022 financial results have triggered optimism. The EV maker has beat analysts’ revenue as well as EPS expectations with its latest quarterly results and its recent 10-year agreement with the government of Saudi Arabia to deliver EVs could be instrumental to the stock recovery.
Whether LCID is a good investment for you depends on your portfolio composition, investment goals and risk profile. Different trading strategies will suit different investment goals with short or long-term focus. You should do your own research. And never invest more than you can afford to lose.
Why has the Lucid stock price been going down?
With an SEC investigation on its SPAC merger with the Churchill group and bearish conditions in the broader EV market, Lucid stock has lost over 50% of its stock value since the start of this year. Additionally, the Russian invasion of Ukraine has further caused a dip in its stock performance owing to an uncertain macro environment.
What will Lucid stock be worth in 5 years?
According to Wallet Investor, Lucid Group stock could be in the range of $57.511 to $58.461 by January 2027. However, analysts’ forecasts can be wrong and have been inaccurate in the past. Always do your own research. And never invest more money than you can afford to lose.
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