Lucid Group Inc (NASDAQ:LCID) has kept things interesting for investors in 2021. The past month or so has been particularly challenging. LCID stock reached major highs in November as the company and its investors celebrated big milestones.
However, December has been a dumpster fire in comparison. And with shockers like an investigation by the U.S. Securities and Exchange Commission (SEC) into the special purpose acquisition company (SPAC) deal that took the company public earlier this year, LCID is down about 30% in December.
Nonetheless, over the past three days, shares staged a quick three-day rally before eventually falling again. Recent events involving Lucid have dampened the enthusiasm over this luxury electric vehicle (EV) maker just as it was gaining momentum. Thus, the question is whether this should be considered an opportunity to snap up shares in the company at a great price.
As a result of this dip, LCID stock is currently priced at early November levels. That offers significant upside if it recovers, not to mention long-term growth potential should Lucid live up to expectations.
With all of that in mind, though, here’s what you need to know if you’re considering adding LCID shares to your portfolio.
Late Fall, Lucid Starts a Winning Streak
LCID stock started an impressive run in the fall, as a series of big milestones resulted in shares gaining over 125% in a period of six weeks. Highlights of Lucid’s winning streak include:
- Sept. 21, the EPA confirms Lucid Air Dream Edition R range of 520 miles, the longest ever for an EPA-rated EV
- Sept. 28, Lucid Air production begins in Arizona, reservations top 13,000
- Oct. 27, Lucid confirms first customer deliveries at Oct. 30 event
- Nov. 15, Lucid Q3 earnings highlights include $4.8 billion cash on the balance sheet and Lucid Air reservations at 17,000
- Nov. 15, Lucid Air named Motor Trend’s 2022 Car of the Year
More Issues for LCID Stock
After weeks of gains, Lucid shares began to slide at the end of November in a correction. The losses gained steam when news broke on Dec. 6 that it was the subject of an SEC probe. Lucid received a subpoena from the SEC, with the probe reportedly centered on the company’s $4 billion July SPAC with Churchill Capital.
Adding to the pressure on LCID stock, December also included the news that company CEO Peter Rawlinson was selling nearly 467,000 shares. And while this is a tiny fraction of his holdings, the move spooked the market.
By Dec. 9, Lucid stock had bottomed out at $36.52 — its lowest close since Nov. 2.
Recently, LCID stock’s three-day rally began on Dec. 10. The company announced $1.75 billion in convertible senior notes at a 1.25% interest rate. The combination of a low interest rate and the fact that if the buyers choose to convert their money into Lucid shares it would be at the rate of $54.78 per share buoyed investors. In turn, LCID stock got a lift.
Additionally, the latest development saw Lucid join the Nasdaq-100 index. This is good news and resulted in another bump for LCID stock. Additionally, the move adds an aura of legitimacy to Lucid Motors and opens up Lucid shares to consideration by index funds.
Bottom Line on LCID Stock
Overall, investment analysts are a little more cautious about Lucid these days. So, how does it rate in Portfolio Grader? Recent events that have pushed LCID stock down have contributed to a “D” Fundamental grade. Despite that area of concern, at this point, LCID still earns a “B” Total grade.
Should you take advantage of the situation and buy some Lucid shares on the dip? Clearly, investing in the company is not risk-free. No matter the outcome of the SEC probe, there’s a good chance of further volatility ahead.
However, the events of December are likely to be temporary challenges. And when all is said and done, Lucid is an EV company that’s actually producing and delivering vehicles. Not just any EVs, premium-priced EVs that are winning “car of the year” awards. In turn, that equation makes LCID stock pretty tempting at the moment.
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.
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