Shares of Lucid Motors (NASDAQ:LCID) broke out after the company debuted its Arizona manufacturing plant. Furthermore, the company announced that its vehicles were now in production, and they would be delivering vehicles in late October. That was bullish for LCID stock. But the company wasn’t done.
Lucid announced that it will be the first production car to use lidar (i.e., a purpose-built laser sensor) to enable several advanced driver-assistance features. They also updated analysts on their preorder situation which now totals 13,000 vehicles.
I don’t blame electric vehicle (EV) enthusiasts who look at every piece of good news as a reason to push an EV stock higher. After the EV bubble burst, investors have become increasingly skeptical about companies promising to deliver electric vehicles some day.
So with all the positive news, why isn’t LCID stock going to the moon? To be honest, I can’t say for sure. However, I do believe it’s great news for investors who believe in the future of Lucid Motors. Because that future is looking brighter by the day, but it’s not here yet. And I would always rather buy a stock when it’s still priced for future growth.
LCID Stock No Longer in Pre-Manufacturing Mode
One of the most bullish announcements for LCID stock is that Lucid Motors is no longer a pre-manufacturing company. It is now assembling vehicles and plans to make its initial deliveries in late October.
In an interview with Bloomberg, Lucid CEO Peter Rawlinson was pressed on how many vehicles the company will deliver by year’s end. He responded with a very specific “577.” However, he also said that the company would be providing an update on the expectation to hit that number when the company reports earnings in November.
One reason for the cautious guidance is that the company is not immune from the supply chain disruptions that now befall every sector of the economy. But the crisis may be more acute for Lucid since it is unabashedly building a luxury car. Rawlinson said that the pandemic has affected the company’s ability to get the quality parts it needs to build its luxury cars.
Listen to What’s Not Being Said
I can appreciate the progress that Lucid is making and still want to see more before going all in on the stock. Some 500 vehicles and perhaps 20,000 next year is more a proof of concept at this stage. And while that may sound snarky, I’m not belittling that effort. Lucid is doing what other companies are only talking about.
And the company is well capitalized, for now. However, when asked if the company would have to raise more capital, Rawlinson answered in the affirmative. But he wouldn’t commit to when. First, I appreciate when a CEO can honestly say “I don’t know” when presented with a difficult question. Nevertheless, it’s something that investors have to at least consider in terms of potential share dilution.
Nibble on LCID Stock While It’s Cheap
There would be some who would challenge my saying that LCID stock is cheap. The company has a $39 billion market capitalization and hasn’t produced a single car. Fair enough, I was the one urging caution just a month ago because Lucid has no control over the global chip crisis.
But can we agree that the stock is inexpensive? Because if the company makes good on its delivery goals, investors won’t be seeing this price again.
Anyway, I am suggesting nibbling on the stock, not pulling up a chair at the all-you-can-eat buffet. This was the same advice (more or less) that GS Early also offered to InvestorPlace readers.
However, Lucid is doing what other EV companies are still only promising. And that shouldn’t be overlooked.
On the date of publication, Chris Markoch 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 Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.
