Shares of Lucid (NASDAQ:LCID) fell lower this week after the electric vehicle (EV) company reported its first-quarter earnings. Revenue was $149.4 million, which increased by 159% year-over-year. However, that still fell short of the analyst estimate of $209.9 million by a wide margin. Profitability remains far away as well, as the company reported a net loss of $779.52 million. That equates to an EPS loss of 43 cents.
During the quarter, Lucid produced a total of 2,314 vehicles and delivered 1,406 of them. Using the net loss figure of $779.52 million, that means Lucid lost about $550,000 for each vehicle delivered in Q1.
Despite the disappointing earnings, Lucid carried a high short interest as a percentage of float of 21.3% based on the latest available data. Generally, a short interest above 10% is considered high, while a short interest above 20% is considered very high.
Is LCID Stock Setting Up for a Short Squeeze?
As of April 15, there were 143.4 million shares of LCID stock sold short with a combined value of $1.11 billion. Still, short interest actually fell by 1.2% compared to the reading of 21.5% on March 31.
Meanwhile, the cost to borrow (CTB) fee for LCID clocks in at 22.94%, signaling elevated short seller demand. According to The Street, the average CTB fee for a stock ranges between 0.3% and 3%. As with short interest, Lucid’s CTB fee has actually been steadily falling since the reading of 53.29% on April 28.
The question here seems to be which factor has a stronger force that will be able to move LCID. Short interest is certainly high enough to drive a short squeeze, although Lucid’s disappointing earnings resulted in downward pressure.
The company also announced an up to $7.4 billion mixed shelf offering consisting of up to 44.35 million shares of common stock. A resale was also announced that would see selling stockholders sell up to 1.16 billion shares. The selling stockholders include CEO Peter Rawlinson and Saudi Arabia’s Public Investment Fund (PIF).
A short squeeze for LCID could certainly be in the books, although the company has reported several pieces of news that could lead to an even greater decline. Investors should take caution when interacting with LCID, as the stock is primed to be volatile over the upcoming months.
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 InvestorPlace.com Publishing Guidelines.
