Lucid Group, Inc. (NASDAQ: LCID) is an EV manufacturer that is looking to position itself as a leader in the underserved luxury EV niche. While the company has substantial growth potential in this niche, LCID stock has been beaten down since its IPO due to the supply chain woes that hindered the company’s ability to deliver on its production projections. Despite this, LCID stock could emerge as one of the top EV stocks this year as the whole industry is expected to surge thanks to China easing its Covid lockdowns. In light of its recent bearish guidance for 2023, LCID stock is witnessing strong selling pressure – with the stock dropping by as much as 18%. However, the long-term LCID stock forecast could be bullish thanks to its reservations and plans to ramp up production.
LCID Stock News
Despite offering one of the best EVs in the market today, LCID stock has been hit hard this year – with the stock dropping more than 83% YTD. However, LCID could be on track to rebound in 2023 as it works to ramp up production to meet its reservations. With this in mind, LCID has been greatly impacted by supply chain woes this year leading the company to cut its production goal of 20 thousand vehicles to 12-14 thousand vehicles which was then further reduced to 6-7 thousand. Since the company has been struggling to produce new vehicles, LCID’s reservations were also affected as more customers canceled their reservations. In this way, LCID ended Q3 with 34 thousand reservations compared to 37 thousand reservations at the end of Q2.
Panasonic Deal
While these factors have driven LCID stock to new all-time lows, the company appears to be well-positioned to weather the storm in 2023. Looking to reduce its supply chain risks in the future, LCID entered into a multi-year supply deal with Panasonic to provide it with batteries in addition to its deals with Samsung and LG Chem. Initially, LCID will receive batteries from Japan but the company expects its future orders to be received from Panasonic’s US plant in De Soto, Kansas. In this way, LCID would be qualified for US federal tax credits as it would be meeting the US sourcing requirements for EV purchases. Based on this, LCID has the potential to witness higher demand for its EVs in the future.
Since this deal would diversify LCID’s battery supplies, the company appears to be on track to ramp up production in 2023 as it could now weather any future supply chain woes. With this in mind, LCID now has enough supply of batteries through 2023. Considering that the company could now increase its sales significantly in 2023, the current LCID stock price could be an intriguing opportunity for investors bullish on the sector’s future prospects.
PIF Investment
Given that LCID requires substantial amounts of cash to finance its production, the company could be in a somewhat safe position financially thanks to Saudi Arabia’s Public Investment Fund’s involvement in the company. Back in 2017, PIF rescued LCID from financial difficulties by becoming a majority shareholder in the company.
Through this relationship, LCID was able to receive $3.4 billion in financing and incentives over 15 years to build and operate a manufacturing facility in Saudi Arabia. In this way, LCID expects to increase its production by 155 thousand vehicles annually. Considering that LCID is currently upgrading its Arizona plant to increase its capacity to 365 thousand vehicles, the company could be well-positioned to produce more than 500 thousand vehicles once these efforts are completed. In light of this, LCID has the potential to become one of the most profitable EV stocks if it delivers on these projections thanks to its pricing model.
Moreover, PIF allowed LCID to secure a 100 thousand vehicle purchase order from the government of Saudi Arabia over a ten-year period – with an initial commitment to purchase 50 thousand vehicles. According to this deal, LCID is expected to deliver 1-2 thousand vehicles annually and increase to 4-7 thousand vehicles annually starting in 2025. With the first delivery scheduled for Q2 2023, LCID stock could be poised to soar as this deal could help the company bolster its revenues.
Capital Raise
While the company’s high cash burn rate is concerning for many investors, LCID recently closed its at-the-market offering where the company sold more than 56.2 million shares for nearly $600 million. At the same time, LCID is set to raise $915 million through a private placement of 85.7 million shares to an affiliate of the PIF. By raising more than $1.5 billion, LCID now has enough cash to navigate through its business in 2023 without worrying about liquidity. In this way, LCID stock could be poised to rebound in 2023 from its current dip as the company ramps up the production of its portfolio of EVs to meet its reservations.
European Expansion
Meanwhile, LCID appears to be on track for substantial growth in 2023 as the company began delivering its Lucid Air in Europe with its first customers in Germany and the Netherlands. With the company looking to drive more sales in the European markets, LCID has been actively expanding its physical presence in this market. On that note, LCID recently opened its third retail location and first combined service, delivery, and sales center in Europe located in the Netherlands. These openings follow LCID’s earlier studio openings throughout Europe in Switzerland and Germany. Considering the company’s plans for further expansion in Europe, LCID could be well-positioned to secure a market share in the lucrative EU market.
Sapphire Brand
LCID is also preparing to start producing its new Sapphire brand – led by the Lucid Air Sapphire. Considered to be the world’s first fully electric luxury super-sports sedan, this new EV is set to include a three-motor powertrain and has more than 1200 hp. Based on this, the Lucid Air Sapphire is expected to be the most powerful sedan in the world. With a price tag of $249 thousand, the Sapphire brand could further position LCID as the market leader for luxury EVs. As the company plans to start production in the first half of 2023, the LCID stock forecast appears to be bright for 2023 and beyond.
*Updated January 31st, 2023
2022 Production
After a disappointing year where the stock lost nearly 82%, LCID appears to be on the right track to rebound in 2023 with the stock up 90% YTD. LCID started the year by announcing its Q4 and whole-year deliveries. In this report, LCID announced the production of 3493 vehicles in Q4 while delivering 1932 vehicles during the same period. As for the whole-year numbers, LCID produced 7180 vehicles – exceeding its guidance of 6000 – 7000 vehicles and delivered 4369 vehicles. Given the company’s initiatives for further growth this year, the LCID stock forecast appears to be bullish for 2023 and beyond.
Potential Buyout
Although the company is on the right track for long-term growth, LCID stock has been climbing investors’ radars lately following speculations that the PIF – LCID’s majority shareholder – wanted to buy out the company. As a result of these speculations, LCID stock soared by as much as 100% intraday as such a buyout would be at a significant premium. While there has been no confirmation for such a buyout, LCID stock remains an intriguing investment given its long-term potential in the luxury EV segment. With this in mind, LCID remains a highly shorted stock with a short interest rate of 25.3% and 37.5% of its float is on loan. Based on this, a short squeeze could occur if LCID announces major news.
*Updated February 23rd, 2023
EV Credits
Looking to bolster its sales, LCID announced a $7500 EV credit on the purchase of the Lucid Air. Since LCID’s vehicles are ineligible for EV credit, the company itself is funding these credits. Although these credits could severely impact the company’s margins, LCID is betting on growing its sales through these credits which could have a positive effect on its revenues in 2023. With this in mind, LCID will only offer these credits until March 31 when new battery requirements could be set which could affect EV companies’ ability to receive these tax credits. In this way, LCID would be able to compete more efficiently in the EV space.
Production Guidance
Meanwhile, many investors are bearish on LCID’s recently announced 2023 guidance. Although the company beat its 2022 production guidance of 6000-7000 vehicles, LCID is projecting to produce 10 thousand to 14 thousand vehicles in 2023. Since the company successfully produced nearly 3500 vehicles in Q4 2022, this guidance could indicate lower production in 2023 than the current rate. However, this guidance does not include the up to 100 thousand vehicles under the agreement with the Saudi government.
On that note, LCID is set to begin delivering vehicles to Saudi Arabia in Q2 which is a major catalyst to watch. LCID also has 28 thousand reservations which are even more than the company’s projected production. Considering the stock’s current dip on the bearish guidance, LCID stock could be a bargain at current levels ahead of its upcoming catalysts.
LCID Stock Financials
Q3 Earnings
Looking into LCID’s Q3 financials, the company reported a decline in assets compared to the beginning of the year as it reported $6.8 billion compared to $7.8 billion. This decline could be attributed to LCID burning cash as the company’s cash balance declined significantly from $6.2 billion to $1.2 billion. Meanwhile, LCID reported $2 billion in short-term investments that could boost the company’s cash in the coming quarters. Meanwhile, LCID slightly reduced its liabilities in Q3 to $3.6 billion from $3.9 billion. Despite this, LCID’s short-term liabilities more than doubled to $686.5 million compared to $318 million.
As for revenues, LCID reported major YOY growth as it started delivering its vehicles in October 2021. With this in mind, LCID reported $195.4 million compared to $232 thousand. However, operating costs increased to $882.9 million compared to $497.2 million a year ago. In light of this, LCID operated at a net loss of $530.1 million – a slight increase from $524.4 million last year. With the company planning to ramp up its production in 2023, LCID appears to be on the right track to further grow its revenues in the coming quarters – making the LCID stock forecast bullish for investors interested in EV stocks.
2022 Earnings
In 2022, LCID reported $7.8 billion in assets – including $1.7 billion in cash and $2.1 billion in short-term investments that can be easily converted into cash. Meanwhile, LCID has $3.5 billion in liabilities of which $1.9 billion is long-term debt. As for revenues, LCID realized $608.1 million compared to $27.1 million a year ago. Despite this revenue growth, LCID missed analyst estimates for revenue by nearly $60 million. Meanwhile, LCID’s costs more than doubled to $3.2 billion compared to $1.5 billion in 2021. However, LCID improved its net loss YoY from $2.5 billion to $1.3 billion.
Media Sentiment
@JazzyLove_LCID is bullish on LCID’s analyst price target of $13.
@NotMsJennyLopez believes LCID could beat its production guidance this year.
Technical Analysis
LCID stock price is currently at $8.79 and the stock shows supports near 8.13, 7.07, and 6.09. Meanwhile, the stock has resistances near 9.58, 11.05, 13.42, 14.94, and 17.84. Following its negative guidance, LCID dropped and retested its support before rebounding off it. With this in mind, LCID could be attractive at current levels given its plans to ramp up production in 2023. Considering the gap near $10 on the chart, LCID could be a profitable buy at its current level.
Although accumulation took a hit following LCID’s bearish guidance it is witnessing an uptick which could be attributed to investors’ confidence that LCID could be undervalued at its current PPS. Meanwhile, the MACD is bearish but a crossover appears to be approaching which could see LCID run in the near term. The RSI picked up from 14 to 33 indicating that LCID is slightly oversold. Based on these indicators, LCID could be poised to run soon – making the current PPS an attractive entry for bullish investors.
LCID Stock Forecast
Although LCID has substantial long-term potential, the stock is trending downwards due to its recent bearish guidance. However, LCID could be conservative in its guidance considering the current macro headwinds. With 28 thousand reservations, LCID could be in a prime position to grow its revenues over the coming years as it continues to work toward ramping up production. In this way, LCID stock price could be set to appreciate in value this year – making the current dip an attractive entry for bullish investors. Given that the supply chain issues that hindered the EV industry are easing and the company’s diversification of its battery suppliers, the LCID stock forecast could be bright for the future.
Meanwhile, investors are increasingly bullish on LCID’s European expansion plans where the company opened three retail locations this year Germany, Switzerland, and the Netherlands. Moreover, LCID recently started delivering its first EVs to Europe for its customers in Germany and the Netherlands. Given that the European market is one of the fastest-growing EV markets in the world alongside China, LCID could be set to witness a major surge in sales once it successfully ramps up its production.
LCID stock forecast 2025 also appears to be bullish thanks to PIF’s investment in the company. With the company expecting to complete its Saudi Arabia facility in 2025, LCID could benefit from the nation’s Saudi Vision 2030 which aims to transition from fossil fuels to sustainable energy. With the company already in an agreement with the Saudi government for the delivery of 100 thousand vehicles over the next 10 years, LCID appears to be well-positioned to become an industry leader in the Middle East region. Considering that the first delivery to the Saudi government is scheduled for Q2, the current LCID stock price could prove to be a major opportunity for long-term investors.
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