The Nasdaq Composite index has dropped more than 3% this week and it does not come as a surprise to see many growth stocks also taking a beating. Lucid (NASDAQ:LCID) is a speculative growth stock and electric vehicle (EV) play. LCID stock has seen a dip of more than 13% in the week. The sole reason for this dip is not the plunge in the composite index but there are a few company-related issues. LCID stock is down 39% year to date and is trading at $22 today. It has gone from $26 to $22 in a period of five days.
LCID stock started the decline at the beginning of March when the company reported delivery of only 125 Dream Edition Cars in 2021. Investors were looking for a bigger number and this pushed the stock into a downward spree. The company also added that it had delivered more than 300 units of the Dream Edition cars by the end of February this year and would begin deliveries of the other models only after completing 520 deliveries of Dream Editions.
The EV maker has dropped its estimate for this year’s vehicle production by up to 40% and expects to produce EVs in the range of 12,000 to 14,000 considering the supply chain and logistical issues it is facing. I was always skeptical about the company’s production targets and had written about it in my previous coverage of the stock.
Any more news about the delay in ramping up production will continue to knock the stock down. However, my fellow colleague at InvestorPlace Faisal Humayun believes that the stock has a long way to go and you should keep it on your radar. Analysts are also lowering their price target on LCID stock. A Morgan Stanley (NYSE:MS) analyst Adan Jonas has a price target of only $12 while Citigroup (NYSE:C) analyst Itay Michaeli has a price target of $45 a share based on the unimpressive 2022 production outlook and the delay in the launch of Gravity SUV to 2024.
All automakers are facing supply chain issues but Lucid seems to have suffered a lot more. Best to avoid LCID stock for now.
On the date of publication, Vandita Jadeja 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.
