Amid another down day on Wall Street, electric vehicle (EV) manufacturer Lucid Group (NASDAQ:LCID) gave investors a reason to smile, but only modestly. Earlier Wednesday morning, management announced its new Advanced Manufacturing Plant called AMP-2, its second such facility and the first one in an international location. Still, LCID stock has a long way to go before gaining credibility.
According to the accompanying press release, Lucid stated that the AMP-2 represents “the first-ever car manufacturing facility in Saudi Arabia,” marking not only a milestone achievement for the upstart EV maker but also a historical one for the Kingdom. Specifically, the new facility will manufacture Lucid EVs for Saudi Arabia and export to other markets.
Moreover, the AMP-2 facility “received significant support from the Ministry of Investment of Saudi Arabia (MISA), the Saudi Industrial Development Fund (SIDF), and the Economic City at King Abdullah Economic City (KAEC) and will play a pivotal role in accelerating Saudi Arabia’s strategic goal to diversify its economy.”
In addition, Lucid will support the Saudi Green Initiative’s effort to ensure that 30% of new car sales in the Kingdom are electric by 2030.
LCID Stock Presents Both Risks and Rewards
Naturally, the latest announcement presents a fundamentally powerful framework for LCID stock. “We are delighted to make history today in Saudi Arabia by opening the country’s first car manufacturing facility, which will produce our award-winning electric vehicles and support the country’s vision for a more sustainable and diversified economy,” said Lucid CEO and Chief Technology Officer Peter Rawlinson.
To be sure, Rawlinson has every right to be enthusiastic about the milestone. According to Vantage Market Research, the global EV market reached a valuation of $193.55 billion last year. Experts project that by 2030, the sector will hit $693.7 billion, representing a compound annual growth rate (CAGR) of 17.3%.
Within this broad ecosystem, the Middle East and Africa EV market size may grow from its projected 2023 valuation of $2.7 billion to $7.65 billion by 2028. While an obviously smaller piece of the pie, the CAGR is higher at 23.2%. Therefore, LCID stock stands on very solid ground.
Nevertheless, it’s undeniable that Lucid encountered significant challenges this year. Since the January opener, LCID stock has dropped more than 13% in equity value. Unfortunately, this performance clashes sharply with rival Tesla (NASDAQ:TSLA), which has gained over 118% during the same period.
As well, with LCID trading at a little above $5.40, it’s a far cry from the pre-merger initial offering price of $10.
Why It Matters
Adding to concerns for LCID stock, analysts unenthusiastically rate shares as a consensus hold. This assessment breaks down as three buys, four holds and two sells. On average, the expert price target lands at $7.50, which conspicuously symbolizes a 40% upside potential.
On the date of publication, Josh Enomoto 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.
