After a stunning run last fall, investors have hit the brakes with shares in Lucid Group (NASDAQ:LCID). Granted, LCID stock isn’t the only electric vehicle (EV) play to slow down over the past few months. Many of its publicly traded rivals, early stage and established alike, have run into the same issue.
As the market takes a breather on growth stocks of all kinds, it may be difficult for Lucid, one of the more promising EV plays out there, to accelerate higher in the near term, even as it wows the world with its flagship vehicle, the Lucid Air. Winner of Motor Trend’s 2022 “Car of the Year” award, the electric-powered luxury sedan began to roll off the assembly line last October.
It may be executing flawlessly, proving its doubters and skeptics wrong. But admittedly, the market got somewhat ahead of itself bidding it up throughout 2021. You could say that its inclusion in a major stock market index (more below) was premature, as well.
Having said all this, I wouldn’t write it off as an opportunity. While it may hold steady at or around current prices of $38.72 per share for the time being, think of it like it is stopping to recharge. When the next big bit of positive news come out, chances are it will zoom higher once again.
The Latest With LCID Stock
Lucid shares may be slowing down. But the company itself continues to charge ahead. Not too long after the start of the new year, the automaker announced its plans to begin making European deliveries later this year. Expect to hear similar headlines many times this year as the company, leveling up after completing the first hurdle of making initial deliveries, now moves to the second challenge of scaling up production.
The ultimate performance of LCID stock in 2022 hinges on climbing this second hurdle. Only time will tell whether it makes it. That may explain the sell-side community’s largely “on the fence” view on it. According to the Wall Street Journal, roughly half of analysts covering the stock give it a “hold” rating.
Still, it’s hard not to see Lucid carry on with its winning streak. Even as the stock has lost momentum in the past few months, the underlying company is still on a tear. In recent months, it has hit a lot of milestones. Reservation numbers continue to ratchet up. Assuming it hits its 2022 production goal of 20,000 vehicles, chances are it won’t have much trouble finding buyers, as 17,000 customers have put in reservations for the Lucid Air.
Put simply, prospects remain bright for the company. Nevertheless, don’t expect that to immediately translate into a resurgence of excitement for the stock.
“Too Far, Too Fast” Is no Deal Breaker
The company may be firing on all cylinders operations-wise. But it’s really no surprise that LCID stock has seemingly stalled out as of late. It’s not just volatility that’s playing a role in its short-term performance. The market is now taking into account that it got a little ahead of itself with its exuberance during 2021.
Investors themselves weren’t the only ones possibly guilty of getting carried away. The Nasdaq 100’s selection committee may have put the electric cart before the horse, as well. That is, when it added the EV maker to the widely-followed index. My view is that it was too soon to add it.
However, don’t mistake “too far, too fast” to mean that this is a situation you should take a hard pass on. Far from it, as what we have seen so far indicates it has the makings of a long-term winner. The takeaway from this is that, after getting a lot of its future growth priced into it, the underlying company needs to play catch up.
Fortunately, this does necessarily mean it’s going to be a long process. A “little bit carried away” is the keyword here. It may trade sideways for now, yet once it has game-changing news to report, shares will start to rev up again.
The Verdict With LCID Stock
Earning a “B” rating in my Portfolio Grader, don’t get impatient if Lucid remains at the charging station in the near-term. Don’t panic either if another bout of market volatility knocks it back down to say, $35, $30, or even $25 per share.
The story here is still playing out. At times, it’s going to get bumpy. But if you approach it as a long-term play and take into account its risks by making it a small position in your portfolio, consider now a good time to hop along for the ride with LCID stock.
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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