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Lucid Is Growing. Are You Buying?


  • Lucid (NASDAQ:LCID) is making strong expansion moves.
  • The company has enough cash flow to sustain growth.
  • LCID stock below $20 is a good bargain.
A Lucid Air pre production electric car is seen at a Lucid showroom in Millbrae, California. LCID stock.

Source: Tada Images / Shutterstock

Electric vehicle (EV) maker Lucid (NASDAQ:LCID) is in the news for several positive catalysts. Despite losing 67.3% in value over the past six months, LCID stock looks attractive. The stock was trading at its all-time high in November 2021, but hasn’t had a smooth ride this year. It is down from $40 in January to around $17 today. However, I see the dip as a chance to accumulate the stock.

LCID stock is growing and now is the time to load up. Here are two reasons why I think so.

Ticker Company Price
LCID Lucid Group, Inc. $17.10

Saudi Arabia Production Facility

Lucid recently announced the plans for a production facility in Saudi Arabia and upon completion of the facility, the company will be able to manufacture 155,000 vehicles in a year, which is a huge number considering the fact that it only delivered 360 vehicles in the first quarter this year. That said, Saudi Arabia will purchase up to 100,000 vehicles from Lucid over a period of 10 years. The facility will initially serve the Saudi Arabian market and it will receive $3.4 billion in incentives over the next 15 years from Saudi Arabia. We might not see any immediate jump in production, but it is a huge catalyst for the company. 

Additionally, its Arizona facility will have an output of 35,000 EVs per year. When combined with the new production facility, it will have the capacity to manufacture 500,000 cars a year by 2025. Lucid has gained a huge advantage over its competitors with the Saudi Arabian production facility. After the company slashed the production estimates due to supply chain constraints, the stock was suffering. However, I believe the positive news about the new facility will get the stock moving. 

Strong Financials

Long-term investors always focus on the fundamentals. Lucid managed to impress investors with stellar numbers. The company is in the early stages of growth, but it holds a strong cash balance and impressive reservation numbers. According to the quarterly report, it hit a revenue of $57.7 million despite the slow output of vehicles in the quarter.

The company delivered 360 EVs and is on track to produce 12,000 to 14,000 EVs this year. It holds $5.4 billion worth of cash on hand, which can drive growth in the coming quarters. Additionally, customer reservations stood at 30,000, which is proof that customers are optimistic about the car and are looking forward to buying it. Even if half of the reservations turn into actual sales, the revenue number will be huge.

The Bottom Line on LCID Stock 

LCID stock hit the low of $13.25 earlier this month and sits around $17 today. The recent upside is due to the positive news about the production facility. However, I think Lucid has massive upside potential and it will continue to deliver strong numbers. The EV subsidies from China will also give a boost to the stock in the near term. 

If you are interested in EV stocks, LCID stock is the one to own. 

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.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.

Article printed from InvestorPlace Media, https://investorplace.com/2022/05/lucid-is-growing-are-you-buying/.

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