Lucid Warning: Why LCID Could Stay Stuck in Penny Stock Land Forever


  • Lucid Group (LCID) is trying to spin its recently disclosed round of layoffs as a positive development.
  • However, Lucid Group will take a substantial hit, financially speaking, from the layoffs.
  • Investors should not consider purchasing Lucid stock now.
Lucid stock - Lucid Warning: Why LCID Could Stay Stuck in Penny Stock Land Forever

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We’ve got news to share about electric vehicle manufacturer Lucid Group (NASDAQ:LCID), and you might not like what you’ll hear about the company. Lucid’s management will try to spin the news positively, as expected. Lucid stock gets a failing “F” grade today.

As a reminder, Lucid Group is far from profitable. The automaker incurred a $680.859 million net loss in this year’s first quarter. This is one reason Lucid stock may remain in Penny Stock Land indefinitely. We’ll reveal more facts about Lucid Group — the good, the bad, and the ugly.

Lucid’s Spin Job

Here’s what you need to know in June. Lucid Group disclosed that it’s eliminating 400 jobs, or approximately 6% of the company’s staff. This isn’t an isolated incident; as Yahoo! Finance pointed out, this “move comes a little more than a year after the EV maker cut 1,300 positions in a bid to cut costs.”

Is there any good news in this development? Only if you buy into the commentary of Lucid’s management. They spun this latest round of layoffs as part of a plan “to optimize the Company’s operating expenses in response to evolving business needs and productivity improvements.”

That’s quite a spin job, wouldn’t you agree? Still, Lucid Group’s remaining employees might be nervous about their job security in 2024. The company’s management might be nervous, too, even if they aren’t admitting it.

Lucid Group’s Costly Cost-Cutting Measures

Why would Lucid Group’s management be nervous? They should be ecstatic because Lucid will immediately enjoy cost savings from laying off workers — right?

Actually, no. Bear in mind, firing hundreds of people can cost a lot of money in the immediate term. This is due to associated expenses such as transition costs, severance payments, stock-based compensation and employee benefits. Lucid Group expects to incur around $21 million to $25 million in charges related to the planned restructuring/layoffs.

Moreover, it’s probably not ideal timing for Lucid to do this. The automaker intends to commence production of Lucid’s Gravity electric SUV by the end of this year. It’s already June, so that’s not very far away now, and it looks like Lucid Group will have fewer workers to help out during this crucial period.

Lucid Stock’s Extended Stay in Penny Stock Land

The Lucid Group share price fell below $5 this year, and it’s been in Penny Stock Land for a while now. Despite the management’s attempt at a positive spin job, Lucid’s multiple rounds of layoffs don’t bode well for the company.

Lucid Group’s shareholders should get used to living in Penny Stock Land. Or better yet, investors don’t have to get involved with this toxic asset at all.

So, even as June ushers in hot weather, don’t expect Lucid stock to heat up and break above $5 anytime soon. We’re giving the stock an “F” grade today and definitely not recommending a summertime investment in Lucid Group.

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.

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