As I’m writing this, the turbo-charged rally with Lucid (NASDAQ:LCID) seems to be running out of battery power. It was kicked off late last month, on news of the electric vehicle (EV) maker’s first confirmed deliveries of its Air luxury sedan. LCID stock continued to surge higher in early November, soaring from around $35.50 per share, to as much as $48 per share.
However, now it’s starting to move in reverse.
The market has absorbed the delivery news. Along with another positive development. So, as it falls back to the mid-$40s per share, is it time to pack it in?
Not quite.
Traders buying this as a short-term play may want to be careful. Yet for long-term investors who are bullish on its chances of becoming a major EV brand should treat any near-term price fluctuations as noise. Putting it simply, it’s not as if this company, on its way from zero-to-sixty in terms of deliveries, revenue and (eventually) profits, is just going to cruise up to higher prices.
Instead, like any early stage company, Lucid is going to experience its fair share of hiccups. After all, if you can remember, one of it its key competitors, Tesla (NASDAQ:TSLA) didn’t become a trillion-dollar company in a day.
Best case scenario, a similar situation plays out here with Lucid.
The Latest With LCID Stock
Until just a couple days ago, there hadn’t been another game-changing bit of news since its delivery report late last month.
Then, on Nov. 9, Congress passed the trillion-dollar infrastructure bill. Perhaps it’s not something that directly improves the company’s fortunes, but it helped to bolster enthusiasm for EV stocks in general. It was also enough to give LCID stock an added jolt. This ultimately gave it enough momentum to sustain its rally up to $48 per share.
Again though, the market has absorbed these developments.
And so, the Lucid rally has lost momentum. To make matters worse, this is happening as Tesla is finishing its own respective rally, and has started moving lower. It may take the rest of the EV pack lower with it. That said, like I mentioned above, there’s no cause for concern if Lucid continues to experience a short-term decline in price.
It’s finding success with its initial moves. Lucid managed to get its flagship vehicle into the hands of customers, and it has received glowing reviews from the automotive press. This may prevent the stock from falling fully back to the mid-$20s per share that it changed hands at before the deliveries announcement.
Just keep in mind that if you see this as a great long-term bet on the future of EVs, what’s playing out today won’t be the last bit of volatility this stock experiences.
Expect the Ride to Stay Bumpy
Much of the boost LCID stock received was well-deserved, given it has accomplished what few EV upstarts have yet to do. That is, roll its first batch of vehicles off the assembly line, and into the hands of customers.
Even so, despite accomplishing such a major milestone, it has plenty more milestones it needs to hit. First, it needs to successfully scale up production. That’s a common challenge among the EV companies. As recently as 2020, Tesla itself was still having scaling-related issues. Second, getting from just a handful of deliveries now, to as many as 250,000 by 2026, is easier said than done.
Additionally, Lucid will not just need to beat out Tesla, plus incumbent automakers. It will need to successfully roll out a wider variety of vehicles, at multiple price points, to get to a six-figure annual delivery number. Fortunately, it appears the company has made plans to eventually offer both electric SUVs, plus an EV model, at a more affordable price point.
There’s still uncertainty over whether it will meet these future milestones. So, buckle up for a bumpy ride, if you own the stock, or if you’re thinking of doing so.
The Verdict on LCID Stock
As its only now getting out of the pre-revenue stage, you can expect shares in Lucid to remain volatile. Beyond just the pullback that’s happening right now, other sharp declines in price may be in store. For example, if it experiences any production delays. If we use Tesla as precedent, I wouldn’t rule it out.
Risks notwithstanding, this company is making ample progress. It has a good chance of overcoming future challenges, and becoming a major force in the EV industry.
In turn, leading shares to much higher prices. Another positive aspect to consider? It currently sports a ‘B’ rating in Portfolio Grader.
If you’re bullish on LCID stock, view this latest pullback as an opportunity to add to or enter a position.
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.
The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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