Electric vehicles are witnessing unprecedented growth, which makes many people wonder if they should invest in one of the companies producing them. One of such EV companies is Lucid Motors, and you might have heard its name come up on the news cycle.
However, should you buy shares in Lucid Motors right now?
Lucid Motors (Lucid, for short) is a US-based company that manufactures electric vehicles in the luxury segment. It started as a battery maker under the name of Atieva, quickly rising to become a supplier for electric racing cars. However, the company pivoted into making EVs and has attracted huge investments from Saudi Arabia.
The company, with a factory in Casa Grande, Arizona, started delivering the only model it makes, the Lucid Air sedan, last year. 2021 was a momentous year for several reasons. Apart from starting delivery to customers after years of development, the Lucid Air claimed the top spot in EV driving range with 520 miles, topping Tesla.
Lucid went public in the same year, using a special purpose acquisition company (SPAC) named Churchill Capital IV. A SPAC works by sourcing funds, trading on the stock exchange even though it doesn’t have any physical assets, and then merging with a private company that intends to go public. Lucid trades under the LCID ticker.
The public offering valued the company at $24 billion. The CEO, Peter Rawlinson, explained Lucid went public to accelerate into the next phase of growth.
Lucid plans to introduce an electric SUV known as Project Gravity in 2023. However, its immediate goal is to ramp up production to 20,000 units per year in the first phase of its factory construction before expanding to 300,000.
Lucid makes highly efficient electric cars in the luxury range. Its vehicles command a higher selling price than the industry average. For instance, the Air Dream Performance Edition, the highest trim on its lineup, costs more than $160,000.
Last year, the company reported to the US Securities Exchange Commission that it had more than 10,000 pre-orders for the Air sedan, translating to about $900 million in expected sales.
Lucid touts the Air as better than the Tesla Model S, which Rawlinson helped develop when he worked at Tesla, and the Rivian R1T electric pickup truck in battery efficiency. The company also says its large sedan is ahead of cars from older luxury brands like Audi and Jaguar.
Like Tesla, Lucid seeks to develop most of its technologies in-house, including self-driving features using Lidar.
Lucid plans to launch the Air in Europe and the Middle East in 2022 and break into the Chinese market in 2023.
Lucid stock currently trades at about 40 percent of its highs. It rose by more than 100 percent in November, but most of the gain has been erased.
In December, the SEC announced it was conducting a probe into the company’s merger with Churchill Capital, causing an 18 percent dip in share price. However, a rating of the Air as Green Car Reports Best Car To Buy 2022 caused Lucid’s stock to rise by 7 percent.
IBD Stock Checkup rates Lucid stock a low 38 on its IBD Composite Rating. The perfect score on the scale is 99. Investors often consult the Composite Rating to determine a stock’s performance metric. However, a low score is not unusual for a new stock.
Lucid has updated its outlook for 2022. Instead of its 20,000 units target for the year, it now expects to produce between 12,000 and 14,000 cars. Rawlinson attributed the changes to extraordinary supply chain and logistics challenges.
The company has also revealed its reservations have now totaled 25,000.
Lucid stock is a good look in the long term. However, it is not an advisable buy based on how low it is trading compared to its 52-week high. The company practically doesn’t have any earnings yet. You make the call.