Lone gone are the high times when EV stocks flew to the moon irrespective of the companies’ fundamentals. In 2023, the market’s landscape is quite different and Lucid Group (NASDAQ:LCID) stock can’t thrive on hype alone anymore.
Unfortunately, as the data will show, Lucid Group just hasn’t lived up to its potential lately.
Lucid Group has to deal with competition from a wide variety of EV manufacturers, including one that’s a monster in the industry.
At the end of the day, Lucid stock only earns a “D” grade and investors are encouraged to seek out better opportunities.
LCID Stock Tumbles on Soft Delivery Data
Suffice it to say, July 12 wasn’t a great day for Lucid Group. On that day, Lucid stock dropped almost a full dollar, which is a steep decline for $7 or $8 stock.
What precipitated this selloff? The culprit was Lucid Group’s second-quarter 2023 vehicle production and delivery update.
As it turned out, Lucid produced 2,173 vehicles and delivered 1,404 vehicles during the quarter. This implies a ratio of delivered to produced vehicles of 64% to 65%.
It’s not a positive sign that Lucid Group is making a lot more EVs than the company is selling. Plus, that’s not the only problem. Lucid delivered 1,406 vehicles in the first quarter of the year, so there’s no discernible quarter-to-quarter improvement here.
Wall Street’s experts called for Lucid Group to deliver 1,873 vehicles during the second quarter. So, Lucid’s vehicle delivery result was a letdown in more ways than one.
Lucid Group Must Compete Against Tesla
Lucid Group will have a tough time competing against bigger automakers with such soft EV delivery numbers. Yet, the company has no choice; competition in the crowded clean-energy vehicle market is fierce in the 2020s.
Yet, one Lucid Group insider seems to think that it’s not necessary for the company to go head-to-head against Tesla (NASDAQ:TSLA), even though Tesla may be Lucid’s biggest threat.
In a recent interview, Andrew Liveris, a Lucid Group board member, declared that the company is “not deliberately targeting Tesla.”
Frankly, that’s like a minnow saying that it’s not “targeting” a whale. Lucid Group will have to compete directly against Tesla (a herculean task for a much smaller company) whether the Lucid’s management wants to or not.
Liveris added, “The EV market will continue to be big and explode. You’ve just got to scale and get the cash flow to work.” Perhaps Liveris shouldn’t bring up the topic of “cash flow” right now.
On a trailing 12-month basis, Lucid Group’s free cash flow stands at -$2.8 billion; the company’s operating cash flow is also deeply negative.
Lucid Stock Will Frustrate Loyal Investors
As the old saying goes, the numbers don’t lie. Lucid Group’s EV delivery data speaks for itself, and it’s not saying anything positive.
Moreover, Lucid Group will have to “target” and compete against Tesla and other big EV manufacturers. This will be the case irrespective of whether Lucid’s management wants to acknowledge it or not.
Fighting for market share against Tesla and other large EV makers will be a hard task for Lucid Group.
Hence, LCID stock gets a “D” grade and will probably only bring rage and frustration rather than satisfactory long-term returns.
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.
