Lucid Group (NASDAQ:LCID) hasn’t re-hit all-time lows just yet, but give it time. Lucid stock should decrease in price based on its latest results and guidance updates. The issues of weak demand, cash burn, and shareholder dilution persist.
Lucid may not be on the verge of experiencing a “game over” moment in the near-term, yet the end of the road may be approaching.
LCID’s eventual demise will likely result in further price decline for this failed growth investment.
Lucid Stock: Whipsaw Moves Before and After Earnings
Ahead of Lucid Group’s latest earnings release on May 6, shares rallied sharply. These gains quickly disappeared when the company’s numbers were released after the market closed.
Taking a look at the results themselves, it’s no wonder why investors bailed on Lucid stock in response. For the quarter ending March 31, 2024, Lucid’s revenue came in at $173 million.
While this exceeded forecasts calling for $154 million, as Barron’s reported in its post-earnings write-up, Lucid only beat expectations because of Lucid vehicle sales to the Saudi Arabian government. Demand among external customers declined year-over-year.
Saudi Arabia, through its Public Investment Fund, owns a 60% stake in Lucid. To make matters worse, operating losses remained high.
The company reported losses of 30 cents per share for the quarter. Forecasts were calling for only 25 cents per share in net losses.
Again, the take-away from this is clear. Lucid’s long-standing issues have not gone away. The Lucid brand continues to struggle gaining traction in the U.S. EV market.
Without volume growth, high losses and cash burn continue to persist.
Still the Same Sad Story
Just as key issues with Lucid Group remain, the likely trajectory for Lucid stock remains as is from where it was when we last discussed this “flat-tire of an EV investment,” back in April.
In a nutshell, here’s what likely lies ahead for the company. Cash burn, which is running by as much as $1 billion per quarter, isn’t going to ease anytime soon.
Lucid receives financial support from Saudi Arabia, but LCID’s $2.70 per share price doesn’t guarantee high returns with low risk.
PIF’s additional capital will dilute shareholders without guaranteeing growth. Not only that, as we also discussed previously, the Saudis aren’t going to throw good money after bad in perpetuity. Even Lucid CEO Peter Rawlinson has admitted to this fact.
Hence, barring an unforeseen jump in popularity and demand for Lucid’s premium-priced EVs, even this company’s most committed shareholder could decide to cut the cord.
Bottom Line: Cut Your Losses Now
Other high-profile EV stocks may have a shot at recovery once demand trends become more favorable. However, not even an industry recovery may be enough to save the day for LCID.
With this, determining the best course of action with this stock is pretty cut-and-dry.
If you already own it, no matter whether you bought in near current prices, or at far greater price level, sell as soon as possible. The next capital raise is likely months away, which will drive the next irreversible decline for shares.
If you’ve yet to buy Lucid stock, stay away at all costs. Investing in LCID is a surefire way to end up in tears as the stock drops to $2, then $1 per share, and potentially crashes to zero.
Lucid stock earns a F 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.
