Bargain hunters, beware! The outlook isn’t great for electric vehicle manufacturer Lucid Group (NASDAQ:LCID) stock as the company’s 2023 production and delivery numbers weren’t stellar. Consequently, it’s too risky to go on a bottom-fishing expedition with beaten-down LCID stock.
Besides, the EV industry is generally having a demand problem. Giant automakers like Tesla (NASDAQ:TSLA) should be able to withstand a soft period of demand for EVs. However, Lucid Group definitely isn’t the biggest EV maker or the one with the deepest reserve of capital. All in all, there’s really no bargain to be found here and Lucid stock only deserves a “D” grade.
This Is the Biggest Question for LCID Stock
Baird analyst Ben Kallo hit the nail right on the head. Referring to Lucid stock, Kallo warned, “We expect demand will be the biggest question for the stock in 2024.”
Kallo issued a “neutral” rating on LCID stock, but that might actually be too optimistic. The Baird analyst looks for “improved consumer health and stronger demand to become more constructive.” Yet, just because he’s looking for EV demand to improve, there’s no guarantee that this will happen.
Price cuts by Tesla, along with EV production scale-backs by Ford (NYSE:F) and General Motors (NYSE:GM), signal lackluster demand for EVs. Automotive giants like Tesla, Ford and General Motors have long enough capital runways to ride out a prolonged period of soft EV demand.
In contrast, Lucid Group is a much smaller startup business. Even though these companies all produce EVs, it’s not useful to compare Lucid’s situation to that of Tesla, Ford or General Motors. Noting Lucid’s “cash burn rate,” Blanke Schein Wealth Management Chief Investment Officer Robert Schein warned that Lucid Group “could be out of cash within a year this time next year.”
Lucid Group’s Lackluster Production and Delivery Numbers
We’ve already identified soft EV demand as a major issue for Lucid Group. Another problem for the automaker is that Lucid recently Lucid recalled over 2,000 luxury sedans because of an allegedly faulty component.
Then, there’s Lucid Group aforementioned cash-burn rate. Now, we can add another issue for Lucid: the company’s lackluster production and delivery numbers.
For the full year of 2023, Lucid Group originally targeted EV production of as many as 14,000 units. Then, the company reduced that production target to “more than 10,000” units, and then lowered it to a range of 8,000 to 8,500 units.
Lucid Group’s actual full-year 2023 EV-production result was 8,428 units. Sure, that’s at the upper end of the company’s final forecast of 8,000 to 8,500 units. Yet, it’s far short of the original prediction of as many as 14,000 produced vehicles.
Lucid Group delivered only 6,001 vehicles for the entire year of 2023. The company needs to ramp up its production and delivery pace if it’s going to compete against the likes of Tesla, Ford and General Motors. However, that’s a tall order for Lucid if the company’s cash runway might run out soon.
Lucid Stock: Down 95%, but Still Not a Bargain
We’ve listed some of Lucid Group’s recent issues and challenges. Clearly, it won’t be easy for Lucid to succeed in a highly competitive EV market. Therefore, Lucid stock isn’t a high-confidence pick even if it’s down 95%.
Always remember, unless it’s trading at zero, a beaten-down stock can always keep falling. Lucid Group may recover someday and post amazing production and delivery numbers. For now, however, we’re assigning a “D” grade to LCID stock and can’t recommend it to investors.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
