Key Factors
Lucid had one other tepid quarter with growing money burn, sending shares down 15%. 
The corporate is capitalized now however will burn by it shortly, elevating the chance of further dilution. 
Quick curiosity is excessive and can weigh on the worth motion for quarters to return. 
5 shares we like higher than Lucid GroupLucid’s NASDAQ: LCID inventory worth has been down-trending since 2021, and it’s not over. The Q1 outcomes aren’t horrible, however they did nothing to enhance the outlook for development, market domination, or income. The outcomes frightened the market as a result of spending is rising, and profitability is as elusive as ever. As a result of competitors within the EV market is heating up, value is among the many largest elements driving shoppers, and Lucid vehicles are costly EVs, it’s unlikely Lucid will change course quickly. 
General MarketRank™2.00 out of 5 Analyst RatingReduce Upside/Downside57.0% Upside Quick InterestN/A Dividend StrengthN/A SustainabilityN/A Information Sentiment-0.19 Insider TradingN/A Projected Earnings GrowthDecreasing See Full Particulars Lucid CEO Peter Rawlinson touted plans for a low-cost mannequin to rival opponents like Tesla NASDAQ: TSLA, however that is probably a pipe dream. Rawlinson thinks we might anticipate such a mannequin, with a goal worth of $40,000, in 2026, which might be very troublesome given the price of engineering and hurdles to manufacturing. Get Lucid Group alerts:Signal Up
Tesla, the present EV market chief, is on the identical monitor and has been for years however continues to be unable to supply such a car. Tesla makes cash and might maintain its operations unaided whereas leaning into the low-cost route; Lucid doesn’t. Even when Lucid can deliver a low-cost mannequin to market by 2026, Tesla is projecting 2025 for its low-cost model, so it would probably retain its management place. 
Lucid Is Clearly Underperforming Expectations, Shares Fall 15%
$2.70 -0.01 (-0.37%) (As of 11:58 AM ET)52-Week Vary$2.29▼$8.37Price Goal$4.24Lucid didn’t have a horrible quarter, however the 15.6% income development is 520 foundation factors shy of the consensus as incentives and worth cuts dig into the highest line. The corporate says it produced 1,728 autos and delivered 1,967, which aided the working efficiency, however elevated spending offset the acquire. Will increase in R&D and SG&A of 25% YOY led to a GAAP lack of 30 cents, a nickel shy of the consensus and expenditure is anticipated to stay scorching this yr. Spending is important to ramp up new car improvement. Among the many many issues are capitalization. The corporate is well-capitalized right this moment and acquired $1 billion in further funding in the course of the quarter, nevertheless it comes at a price. The brand new funding and different dilutive efforts have elevated the share rely by 25% since final yr, and extra are coming. The steadiness sheet highlights embody 504,450 shares of redeemable convertible most well-liked inventory that weren’t there final yr. Buyers ought to anticipate additional dilution as a result of the corporate is in a cash-burning trade, has restricted funds, and has billions of unissued shares. 
The share rely and outlook for dilution are two causes the brief sellers have an interest, and the brief curiosity is excessive. The brief rate of interest was working close to 30% on the final report and has probably remained unchanged. As a result of the corporate continues to burn money buyers ought to anticipate the brief curiosity to stay excessive and to extend over time. The corporate is well-capitalized now, however the $700,000 in quarterly burns will eat by $5 billion in a matter of quarters; further dilution could possibly be on the desk earlier than the top of 2024. 
Analysts May Put a Backside in Lucid’s Market
Analysts’ sentiment in Lucid soured to Scale back over the previous few quarters and is unchanged now. Nevertheless, the group has hesitated to make revisions instantly after the earnings launch and views the inventory as undervalued till it does. Marketbeat.com tracks 10 analysts with rankings on the inventory, they usually include a consensus goal of $4.35 and a low of $2.90. The $2.90 low goal is above the present worth motion and should lead the market to rebound if left unchanged. 
Lucid shares are in a downtrend and should have reached the underside, however there are dangers for bulls; it could possibly be a penny inventory quickly. The 15% post-release drop has the market set as much as retest the latest low, and a brand new low could also be set. The downtrend can be confirmed in that state of affairs and should prolong to the low $2 vary or decrease. The MACD and stochastic favor a brand new low, which can come inside days or even weeks. 
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