It’s been an interesting ride for investors of California-based electric vehicle manufacturer Lucid Group (NASDAQ:LCID), to say the least. Clean energy vehicle stocks are known to be volatile, but LCID stock has been particularly prone to whipsaws in both directions.
However, there’s an old saying to bear in mind: nothing ventured, nothing gained. Investing in Lucid is risky, and will test your commitment to the ongoing EV revolution.
This isn’t to say that a position on LCID stock is based solely on faith. For one thing, Redburn analyst Charles Coldicott expects the global EV market to grow by “up to 10x by 2030,” which of course would be bullish for Lucid.
Coldicott assigned a $39 price target for the stock, by the way. Could the share price actually get there? That’s the billion-dollar question, so let’s start off now with some technical analysis.
A Closer Look at LCID Stock
The recent downturn in LCID stock may be disconcerting, but it’s not necessarily Lucid’s fault in particular.
Remember, Lucid is a member of the Nasdaq, and Wall Street started to rotate out of technology stocks in November of last year. And, just as a rising tide lifts all boats, a falling tide can sink all boats.
Lucid didn’t encounter any particularly bad company-specific news in November. Yet, LCID stock started to decline from its $60 resistance level nonetheless.
It’s interesting, from a technical standpoint, that this stock also encountered resistance at $60 back in February 2021. Therefore, that’s a pretty good place for Lucid’s shareholders to consider taking profits.
LCID stock was holding steady in mid-February at $29, so the worst of the drawdown may be in the rearview mirror. As for Coldicott’s $39 price target, it could easily be reached within the next couple of months if investors finally quit beating up on the Nasdaq.
The President Makes It Evident
In order for Lucid and its stakeholders to prosper in the U.S., certain EV infrastructure will need to be in place. A nationwide network of charging stations will, when it’s built, enable Lucid to thrive as EV adoption grows.
Evidently, President Joe Biden’s administration is willing and able to make this vision a reality. Just recently the Biden administration announced a major round of funding dedicated to building America’s EV charging network.
Under the National Electric Vehicle Infrastructure (NEVI) Formula Program, nearly $5 billion will be provided over five years to help U.S. states create that network. About $615 million of those funds will be allocated this year.
It’s a quantum leap towards EV adoption in America. Plus, this could help spur more interest in LCID stock, and thereby trigger a rally in the near term.
Watch for Expansion
Even while Lucid shares struggle to get off the ground, the company itself appears to be in growth mode.
Just to give you an example, Lucid recently opened up a new Studio location at Fashion Island in Newport Beach, California. The picture provided in the press release shows an amazing-looking Studio, so these aren’t your typical automobile dealership locations.
With the Newport Beach location, Lucid now has 21 locations open in North America. Furthermore, the company has service centers open in important markets such as Chicago, Seattle and Houston.
On top of all that, Lucid revealed plans to build a production plant in Saudi Arabia in 2025 or 2026. Only time will tell whether Lucid’s luxury EVs will be popular in Saudi Arabia. Still, it’s fascinating to witness the company moving into these high-potential markets.
The Bottom Line
The issue surrounding EV adoption in America isn’t a question of “if,” but only a question of “when.”
Millions of dollars will be allocated toward EV infrastructure, and particularly chargers. This is great news for all EV manufacturers, including Lucid.
With that in mind, LCID stock becomes a more interesting long-term investment. The company’s growth is notable, and it’s part of a global movement that’s truly unstoppable.
On the date of publication, David Moadel 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.
