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LCID Stock Alert: Needham Is Losing Faith in Lucid Motors


  • Needham & Company has downgraded Lucid (LCID) stock to a “hold” rating from a “buy” rating.
  • Analysts at the firm believe that a lack of near-term demand is the company’s biggest constraint.
  • LCID stock is down by more than 30% so far this year, vastly underperforming the market.
LCID stock - LCID Stock Alert: Needham Is Losing Faith in Lucid Motors

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Lucid (NASDAQ:LCID) stock has slid lower by about 45% during the past six months, although research firm Needham & Company believes more pain could be on the way. This morning, Needham analysts downgraded LCID stock to “hold” from “buy,” citing a lack of faith in near-term demand.

Needham believes that weak demand is the company’s biggest risk. At the same time, analysts at the company are impressed with Lucid’s technology and are excited about the upcoming Gravity SUV. Lucid expects the vehicle to enter the market in late 2024 with a starting price of less than $80,000. The vehicle has a projected range of over 440 miles and a zero to 60 mph acceleration time of less than 3.5 seconds.

Needham Downgrades LCID Stock to “Hold”

As of now, the bull case for LCID stock seems to lie in the success of its Air, Gravity and technology. Back in June, Lucid announced that it had entered into a long-term strategic technology partnership with luxury vehicle maker Aston Martin (OTCMKTS:ARGGY). The partnership will see Aston Martin pay Lucid $457 million in exchange for its powertrain and battery systems.

Needham has estimated that Aston Martin will pay Lucid between $20,000 and $30,000 for each vehicle equipped with Lucid’s technology. However, this estimate could be problematic due to the high price tag.

“While our initial math is likely far from exact, it does lower our confidence in [Lucid] striking a deal with a legacy [original equipment manufacturer] to license their EV technology given the dollars per vehicle Aston Martin is potentially paying,” said Needham analyst Chris Pierce.

As for the upcoming Gravity, Pierce isn’t putting too much weight on the reservation numbers if Lucid chooses to release them. His reasoning is due to higher reservations than actual orders for the Air.

Needham now only carries a “buy” rating for one electric vehicle (EV) company, which is Rivian (NASDAQ:RIVN).

Lucid carries an average price target of $5.06 among 12 analysts with coverage of LCID stock. The price target implies upside of more than 20% from current levels.

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.

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.

Article printed from InvestorPlace Media, https://investorplace.com/2023/11/lcid-stock-alert-needham-is-losing-faith-in-lucid-motors/.

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