Investors have put the petal to the metal in shares of Lucid Group (NASDAQ:LCID) this month. But can bulls continue to drive LCID stock to more significant gains? Let’s look at what’s happening off and on the price chart, then offer a risk-adjusted determination aligned with those findings.
It’s September and Wall Street is living up to its reputation for committing itself to historically weak price behavior. Entering the week the S&P 500 has gapped lower on U.S. debt ceiling jitters and following the tail of decidedly weaker, mired-in-red Asian markets.
Yet while the S&P tallies up losses approaching 4% on the month, shares of Lucid Group are tacking on about 1% on the session and offering monthly gains of just over 18%.
LCID Stock Begins With a SPAC
And the bullish follow-through isn’t without cause.
Over the past year, since first entering publicly-traded life vis-à-vis blank check outfit Churchill Capital and since late July as a de-SPAC’ed LCID stock, the luxury EV play has done a fair job of confirming the stock market is really one made up of stocks.
Compared to the broader market’s return of 16%, LCID stock is up nearly eight-fold that performance with a year-to-date gain of more than 130%.
At the same time and in a market which has seen growth stocks like Lucid plunge in price in 2021 over lofty multiple concerns, shares corrected as much as 75%.
And today, as the S&P 500 struggles with a 4% drawdown from this month’s record highs, LCID stock remain 65% beneath its peak valuation of nearly $65 set in February.
Suffice it to say, LCID isn’t a blue-chip holding for widows and orphans.
Perspective on Lucid
Lucid has also failed to track the performance of EV champ Tesla (NASDAQ:TSLA). And mind you, that’s despite the outfit’s targeted luxury market, constant TSLA stock comparisons and CEO Peter Rawlinson, whose resume includes work as chief engineer on Tesla’s Model S.
Obviously, perspective on how LCID is performing is relative. Some investors are enjoying outsized gains in 2021 and others wish they’d never heard of Lucid’s Churchill Capital.
Today though, the company is already showing itself as worthy EV competition when its Air Dream Edition’s rubber hits the road later this year. And that should also help with ensuring LCID stock turns into a more uniformly worthy investment for bulls.
The 500-Mile Mark
This past week, the Environmental Protection Agency announced Lucid’s soon-to-be-released EV is the first auto to offer a range rating of more than 500 miles on a single charge.
The vehicle’s actual 520-mile range is also favorably well-above Tesla’s Model S’ 405 range by nearly 30% using its “world-leading, in-house EV technology.”
Next up and in front of the EV’s debut, next week is Lucid’s Production Preview Week. The event will showcase the company’s massive, state-of-the-art Arizona production facility.
Critics are free to continue with silly Tesla-to-Lucid comparisons of LCID’s $38 billion valuation versus Tesla’s same-point-in-time pre-production pricing. More smartly, investors can hop on board what was once the impossible, now known to be fully executable – and looking forward, being clearly improved by LCID.
LCID Stock Weekly Price Chart
Source: Charts by TradingView
Technically, September has been a corner-turning month for LCID stock. The weekly view reveals shares confirming an undercut, double-bottom pattern this past week after the construction of an inside doji, hammer candlestick.
Along with stochastics bullishly-aligned and just now trending into neutral territory and pinched Bollinger Bands, September’s gains sets the stage for a much larger rally. Eventually, a trend higher could turn into a test of LCID’s 38% retracement level.
More optimistically, down the road Lucid shares could challenge the 50% Fibonacci level as shares attempt to move into the upper-half of its lifetime corrective base.
But both well-watched resistance levels are a ways away from current prices. And besides, resistance is meant to be overcome, right? Tesla certainly proved that point as the stock ran over its bearish critics time and time again the past few years.
Situated for Success?
All told, Lucid looks well-situated for success. But investors should be fully acceptant that overly-critical Tesla comparisons and bouts of less favorable stock volatility aren’t likely to disappear anytime soon.
Bearing that in mind, a LCID stock February $25/$40 collar looks compelling off and on the price chart.
Bottom line, this spread maintains about 12% of the risk associated with a standalone Lucid stock position. Not bad, right? As important, given its fully-hedged and adjustable features, a collar in LCID looks terrific whether shares are temporarily driving investors crazy or into a longer-term state of euphoric giddiness.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.