Lucid Group (NASDAQ:LCID) stock hit a new all-time low early last month following disappointing quarterly results and guidance. Shares continue to languish despite subsequent positive news about the company. Lucid unveiled its latest vehicle model, an electric SUV known as the Gravity, at the 2023 Los Angeles Auto Show.
Despite the Gravity’s debut, investor enthusiasm is lacking due to Lucid’s ongoing production, delivery, and cash burn issues.
LCID Stock: Gravity? Yes. Gravitas? Not Quite
Automotive journalists say the recently unveiled Lucid Gravity (set to be available for purchase next fall) “adds gravitas” to Lucid’s lineup, which until now comprised only one vehicle, the Lucid Air electric luxury sedan.
The “gravity/gravitas” puns may work well for reviews, but investors aren’t quite ready to give this EV contender an increased level of respect. Frankly, I don’t blame the market’s reluctance to get pumped up again about LCID stock.
Since 2021, Lucid has gone from appearing as a major competitive threat to Tesla (NASDAQ:TSLA), to delivering disappointment after disappointment in its efforts to bring premium electric vehicles to market. As seen over the past few months, the disappointing news keeps coming in.
In October, the company reported yet another quarter of lackluster vehicle deliveries. In November, while net losses came in narrower than expected, Lucid lowered its 2023 production guidance. This drove LCID’s plunge to a new all-time low. Worse yet, looking forward to 2024, it doesn’t appear that better operating results are just around the corner.
Competition Worries Once-Bullish Analysts
Just prior to Lucid’s Q3 2023 earnings release, 3 out of 10 analysts covering LCID stock gave shares a “buy” rating. While hardly a sign of bullish consensus among Wall Street, the stock had at least some of the sell-side in its corner.
Since then, however, the three once-bullish analysts are now on the fence. As InvestorPlace’s Eddie Pan reported last week, one of these recent analyst downgrades that has attracted a lot of attention is the downgrade of Lucid by Needham’s Chris Pierce. On Nov. 27, Pierce downgraded shares from “buy” to “hold.”
Pierce has also become less optimistic about the possibility of Lucid profiting from licensing its EV technology, citing the prevailing economics. He also cited weak near-term demand for EVs continuing to limit sales in the coming year.
As longtime fans become former fans, it may be time to follow suit.
Before History Repeats Itself, Avoid This Stock at All Costs
Based on last month’s disappointing news, as well as the many concerns cited in Lucid’s latest sell-side downgrade, 2024 could shape up to be much like 2023.
Lucid could once again make little-to-no progress with production and deliveries. Cash burn may stay high. While it has enough cash on hand to keep the lights on for now, further losses and/or subsequent production build-out efforts may require the company to once again raise cash through a dilutive secondary offering.
LCID has tumbled 31.6% so far this year, and could keep sliding through the end of this year, and into next year. Before history repeats itself, there’s just one move to make. If you currently own LCID stock, sell as soon as possible. If you don’t own it, avoid it at all costs.
LCID stock earns a D rating in Portfolio Grader.
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.
