Based in California, electric vehicle (EV) manufacturer Lucid Group (NASDAQ:LCID) isn’t particularly interested in the status quo. The company is preparing to redefine the EV space — and LCID stock investors have to be on board with its ambitious vision.
They also have to be able to tolerate risk. As we’ll see, the Lucid share price can move up or down fairly quickly, shaking weaker hands out in the process.
That said, it’s possible to use historical price action to established a defined range for LCID stock. This should help short-term traders know when to get in and when to get out.
The biggest gains could come to Lucid’s long-term investors, however, as this is a company with a vastly improving cash position. Still, there are warning signs to be aware of. So, by all means, please don’t risk your life savings on this stock (or any EV stock, for that matter).
A Closer Look at LCID Stock
There’s no denying it. Folks who traded LCID stock with perfect timing in 2021 made an absolute killing.
Early in the year, the stock vaulted from $10 to more than $55 in just a few weeks’ time. Maybe Reddit users were involved in that run-up, maybe they weren’t. It’s hard to prove either way.
Interestingly, though, $55 proved to be a stubborn resistance level again several times in November. Therefore, if you choose to hold LCID stock, it’s probably not a terrible idea to take profits at that level.
Now, let’s talk about support levels. Back in May — and then again in September — the Lucid share price settled gently at $17 before buyers rushed in and pushed it back up.
The market might be trying to tell us something here. If LCID stock gets anywhere near $17, that’s probably a good time for both short-term and long-term traders to accumulate shares.
Despite wild fluctuations in the LCID stock share price, investors have reasons to stay in the trade. For example, the Lucid Air was recently named the “2022 MotorTrend Car of the Year.” That’s quite an honor for a relatively young startup automaker. Ed Loh, the Head of Editorial for MotorTrend, offered high praise for the Lucid Air:
“With the longest driving range of any electric vehicle on the market, an EPA estimated 520 miles, and over 1,100 horsepower available, the Lucid Air is a technological tour de force.”
That honor has certainly helped legitimize Lucid Group. But another event also enhanced the company’s credibility recently; the EV company joined the Nasdaq 100.
Lucid Group CFO Sherry House characterized this “prestigious” index inclusion as a “recognition of our progress establishing Lucid in the EV market and our future growth strategy.”
Piling Up the Cash
Let’s not mince words here. Electric vehicle market startups aren’t always known for being well-capitalized. However, Lucid Group appears to be the exception rather than the rule here. At the end of 2020, the company had $614.4 million in cash and cash equivalents — not too shabby.
That sounds impressive, sure. But it gets even better. At the end of the third quarter of 2021, Lucid had cash and cash equivalents totaling roughly $4.8 billion.
Of course, there’s a caveat. So far, Lucid hasn’t turned a profit.
During the first three quarters of 2021, Lucid Group incurred a net earnings loss of around $1.53 billion. In the equivalent period of 2020, that figure was a loss of roughly $408 million.
As such, LCID stock investors should keep an eye on this company’s bottom line and hope that it starts to move toward profitability in the near future.
The Bottom Line on LCID Stock
Still, whether they’re in it for a quick flip or a long-term investment, there seems to be something for almost everyone with LCID stock.
For short-term traders, there are clearly defined levels to watch and act on. The important thing here is to stay nimble. Don’t get greedy with your profits.
Meanwhile, long-term investors can (and should) appreciate Lucid’s improving capital position. Just be mindful that Lucid Group isn’t profitable yet. Achieving positive earnings is a goal the company ought to focus on in 2022.
On the date of publication, David Moadel did not hold (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.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.