Is Lucid (NASDAQ:LCID) stock worth only $3 per share? That’s what RBC analyst Tom Narayan thinks, as he lowered his price target to $3 from $6 this morning.
Narayan believes that Lucid has a technological advantage over its other electric vehicle (EV) peers. However, the company has been unable to attract sufficient demand due to an EV price war and limited visibility. For example, Lucid guided for the production of between 10,000 and 14,000 vehicles at the beginning of 2023. Actual 2023 production was only 8,428 vehicles. For 2024, production is only expected to grow by about 7% to 9,000 vehicles.
LCID Stock: RBC Slashes Price Target in Half to $3
Narayan believes that Lucid should partner with additional automotive manufacturers in order to cut costs and increase its chances of becoming a successful EV company. Lucid did this last June when it announced a partnership with Aston Martin:
“Aston Martin will receive direct access to Lucid’s proprietary electric powertrain technology, including its ultra-high performance twin motor drive unit, renowned battery technology, and revolutionary Wunderbox.”
In return, Lucid will receive technology access fees in the form of cash and Aston Martin shares.
On TipRanks, Narayan is ranked at #1,463 out of 8,768 analysts. He has a success rating of 53% and an average one-year return of 7.5%.
LCID carries an average price target of $4.11 among 14 Wall Street analysts with coverage. Citi has the highest price target of $7.50, while CFRA has the lowest at $1.
CEO Peter Rawlinson Addresses Lucid’s Capital Needs
In an interview with the Financial Times, CEO Peter Rawlinson discussed Lucid’s need for capital and reliance on Saudi Arabia’s Public Investment Fund (PIF). Rawlinson described a capital raise for Lucid as “inevitable,’ adding that “it’s just a question of when.” He also acknowledged PIF’s significant contributions to the company.
“If I adopt a mindset that there is bottomless wealth from PIF, that is very dangerous, that is something I will never do, I respect them far too much for that,” said Rawlinson.
PIF currently owns 60% of Lucid, or 1.37 billion shares. The sovereign wealth fund has participated in every single one of the company’s funding rounds.
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.
