LCID Stock: Why Lucid Group Tanked Over 5% Yesterday?
December 07 2021 - 8:28AM
Finscreener.org
Shares of electric vehicle
company Lucid Group (NASDAQ: LCID)
are down more than 5% on Monday, December 6, 2021. Lucid disclosed
it received a subpoena from the SEC or Securities and Exchange
Commission to produce certain documents relating to an
investigation by the regulatory body.
A report from TheFly states,
“Although there is no assurance as to the scope or outcome of this
matter, the investigation appears to concern the business
combination between the company and Atieva, Inc. and certain
projections and statements.”
It’s quite possible that the
ongoing pullback might be temporary offering investors an
opportunity to buy the dip in a company with enticing growth
prospects.
The bull case for LCID stock
Lucid Group has been on an
absolute tear this year and has surged over 300%, valuing the stock
at a market cap of $77.8 billion. The company is a technology and
automotive entity that develops electric vehicles. It announced the
first group of Dream Edition car deliveries on October 30, shortly
after Lucid Group started production at the Arizona factory in
September. The facility is in fact the first dedicated EV
manufacturing hub in North America.
The Dream Edition models are
equipped with a special 118 kWh version of Lucid’s long-range
battery pack, featuring 22 modules totaling 6,600 cylindrical
cells. It has a certified range of 520 miles on a single charge
which is the
longest for any electric
vehicle.
Lucid Group plans to deliver 520
Dream Editions followed by deliveries of the Air Grand Touring
versions. As of November 15, 2021, it has over 17,000 reservations
and an order book of $1.3 billion. The Advanced Manufacturing Plant
in Arizona has a production capacity of up to 34,000 units each
year.
Lucid Group ended Q3 of
2021
with a cash balance of
$4.4 billion as it continues to invest in the expansion of
manufacturing capabilities.
What next for Lucid Group investors?
Lucid Group expects sales to
touch $2 billion by end of 2022. Further, it plans to expand its
portfolio and enter the luxury SUV space by end of 2023. This might
drive sales to $10 billion by 2024.
In addition to automobiles, Lucid
Group will also leverage its proprietary engineering technology for
applications in energy storage systems. Expansion into other
international markets will also be a key revenue driver for Lucid
Group in the upcoming decade.
The company’s CEO, Peter
Rawlinson explained, “We see significant demand for the
award-winning Lucid Air, with accelerating reservations as we ramp
production at our factory in Arizona. We remain confident in our
ability to achieve 20,000 units in 2022.”
He added, “This target is not
without risk given ongoing challenges facing the automotive
industry, with global disruptions to supply chains and logistics.
We are taking steps to mitigate these challenges, however, and look
forward to the launch of the Grand Touring, Touring, and Pure
versions of Lucid Air through 2022.”
The final verdict
Lucid Group is a company part of
a rapidly expanding addressable market providing it with enough
room to grow revenue at an enviable pace in the upcoming decade.
Despite its strong balance sheet, the company will have to raise
capital to fund its expansion plans going forward.
This in turn will dilute
shareholder wealth significantly which might drive LCID stock
lower.
Further, Lucid Group also remains
vulnerable in a market that is extremely overvalued at current
levels. Investors should be ready for freefall in LCID stock if it
misses earnings or revenue estimates in the upcoming
quarters.
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