Lucid (NASDAQ:LCID) stock is up a staggering 25% today on news that the electric vehicle (EV) maker has signed a promising new materials deal.
So, what’s behind today’s surge?
Today, news broke that Lucid has inked a three-year agreement with Ma’aden Rolling for the supply of aluminum panels for its U.S. Lucid manufacturing facilities. Ma’aden Rolling can produce about 460,000 tons of high-quality aluminum sheets per year. It also produces can sheets and tabs used to produce aluminum cans.
Notably, Ma’aden Rolling is a subsidiary of Ma’aden (aka. Saudi Arabia Mining Co.), which is state-owned. Meanwhile, Lucid is majority-owned by Saudi Arabia’s Public Investment Fund.
The deal should enhance Lucid’s production capacity. Interestingly, Saudi Arabia’s government has pledged to buy up to 100,000 Lucid EVs over the next 10 years. The government seems to want to support the non-combustion transition and jumpstart its automotive industry.
Starting last July, Saudis can rent Lucid vehicles directly from the car maker, further supporting the Kingdom’s sustainability movement.
LCID Stock Enjoys Surprise Jump in Slow Year
Fans of LCID stock should take at least some comfort in today’s stock surge as the company suffers from a general downtrend in EVs the past year or so.
Indeed, after its gangbuster initial public offering (IPO) back in 2020, LCID has been on a slow but steady path down. Even despite today’s jump, LCID is down more than 18% in just the first month of the year. The company lost close to 80% in 2023 as a notable loser in the EV space. The S&P 500 climbed 24% over the same period.
That said, not everyone has lost hope in the once-prominent EV maker. This includes Motley Fool analyst Keith Noonan, who claims that a $15,000 stake in LCID could eventually turn into $1 million, should Lucid climb to a bit under 70% of Tesla’s (NASDAQ:TSLA) market capitalization — which admittedly is a big “if.” Per Noonan:
“If growth in vehicle production and deliveries reaccelerates and suggests that the business could be back on the path to achieving profitability, Lucid’s valuation could see a substantial rebound. However, investors should approach the stock with the understanding that the company’s financial foundations are shaky, and there’s a substantial risk the company’s stock will move lower on the heels of massive sell-offs.”
On the date of publication, Shrey Dua 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.
