Given that anything’s possible on Wall Street, Lucid Group (NASDAQ:LCID) stock could stage an astounding comeback in 2024. Yet, investors should focus on probabilities and facts, and not just on lottery-ticket possibilities. Overall, the risk-to-reward balance doesn’t favor LCID stock and we’re assigning it a low-confidence grade of “D.”
It’s well-established that EV demand has waned recently. Amid this challenging context, it will be difficult for Lucid to compete successfully in a crowded EV manufacturing field. Thus, even if it’s trading far below its peak price, this doesn’t necessarily make it a bargain. Besides, after checking the company’s sales data and production outlook, investors may lose some of their enthusiasm for Lucid Group.
Lucid Stock Gets Another Downgrade
Earlier this year, Lucid Group slashed the prices of its Air Touring, Air Pure and Air Grand Touring vehicle models. Even after cutting the prices of those EVs, however, those vehicle models still had price tags of $74,900 or higher.
This may be a sign that Lucid Group’s EVs weren’t selling very well. Furthermore, in the third quarter of 2023, Lucid generated revenue of $137.8 million. This result fell short of the analysts’ consensus call for $177 million.
Hence, it makes sense that CFRA analyst Garrett Nelson reaffirmed his “sell” rating on LCID stock and cut his price target on the shares from $4 to $2. “With a high cash burn rate and an apparent lack of consumers willing to pay a premium for the brand, we think the company has some major issues,” Nelson remarked.
More recently, InvestorPlace contributor Eddie Pan reported that Needham analysts downgraded Lucid stock to from “buy” to “hold,” citing a lack of faith in near-term demand. Moreover, Yahoo! Finance observed Needham analyst Chris Pearce pointing to “weak demand for the company’s vehicles.”
Should Lucid Stock Traders Get Enthused About the ‘Gravity’?
In November, Lucid Group lowered its full-year 2023 EV production outlook from 10,000 units previously, to a new range of 8,000 to 8,500 vehicles. Apparently, the company did this in order to “to prudently align” Lucid’s production target with the company’s lackluster vehicle deliveries.
Yet, Lucid Group evidently plans to introduce a new EV model. It will be an electric SUV called the Gravity.
Lucid Group isn’t selling many of its more popular vehicle models. So, why should investors have faith that the Gravity will be a strong seller? Another thing to consider is that the Lucid Gravity won’t be available until late 2024. Consequently, don’t expect it to be a revenue generator for Lucid soon.
In addition, Lucid Group stated that the Gravity SUV “will start under $80,000,” as if this were a huge gift to the consumers. Chances are, many American EV shoppers won’t easily be able to afford the Gravity SUV.
If Lucid is going to imply that this EV model is affordable because it “will start under $80,000,” then the company’s management might need a reality check.
You Can Do Better Than LCID Stock
Lucid stock gets a “D” grade instead of an “F” as the company’s upcoming Gravity vehicle model might turn out to be a strong seller. It will help if Lucid Group makes it more easily affordable, but that remains to be seen.
For now, the data indicates that Lucid isn’t selling many vehicles. Therefore, it’s understandable that more than one analyst has downgraded LCID stock. In the final analysis, we don’t feel that there’s an urgent need to invest in Lucid Group now.
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.
