LCID Stock Alert: Why Tesla Just Sent Lucid Motors Shares Crashing

  • Tesla’s (TSLA) disappointing Q1 earnings are sending shares of Lucid (LCID) lower.
  • Tesla’s price cuts may also steal market share away from Lucid.
  • LCID stock is up by more than 15% on a year-to-date basis.
LCID stock - LCID Stock Alert: Why Tesla Just Sent Lucid Motors Shares Crashing

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Shares of Lucid (NASDAQ:LCID) stock are down by about 5% following a disappointing earnings report and further price cuts from electric vehicle (EV) leader Tesla (NASDAQ:TSLA). Tesla’s first-quarter revenue totaled $23.33 billion, beating the Refinitiv consensus analyst estimate of $23.31 billion. Furthermore, adjusted EPS was 85 cents, which matched the Refinitiv estimate. However, profitability declined, as net income fell 24% year-over-year to $2.51 billion. GAAP EPS was 73 cents, showing a decline of 23% YOY.

Since Lucid operates in the same industry as Tesla, news from Tesla can influence LCID stock. Tesla is also the industry leader, which means that Lucid could face the same problems as Tesla, such as declining consumer sentiment and lowered profitability.

LCID Stock Falls on Disappointing Tesla Earnings

Tesla has also cut prices on its vehicles four times this year, which doesn’t bode well for Lucid’s expensive vehicles. Earlier this week, all three versions of the Model Y saw a $3,000 price reduction. The base version of the Model 3 was lowered by $2,000. The Model Y will now set you back between $46,990 and $53,990. Meanwhile, the base version of the Model 3 will be priced at $39,990. These price cuts were likely enacted to qualify for the U.S. government EV tax credit of $7,500 for vehicles priced at $55,000 or below.

Meanwhile, Lucid’s lineup of Air models carry price tags way above Tesla’s vehicles. The Pure version of the Air starts at $87,400, while the Air Touring starts at $107,400. Moving higher, we have the Air Grand Touring at $138,000 and the Air Sapphire at $249,000. For the cost-conscious consumer, Tesla seems like the obvious pick.

Global Equities Research’s Trip Chowdhry has echoed this message. Despite the recent Tesla price cuts, Chowdhry believes that the vehicles are still “priced out of market” and notes that further reductions could be on the way. As a result of the cuts, he believes that companies like Lucid, Rivian (NASDAQ:RIVN) and Fisker (NYSE:FSR) “may go bankrupt” due to Tesla’s “scale and operating efficiencies.”

During Q1, Lucid produced 2,314 vehicles and delivered 1,406 of them. More financial details will be revealed when the company reports its first-quarter earnings on May 8 after the market close.

On the date of publication, Eddie Pan 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 Publishing Guidelines. 

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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