Originally Published by The Money Cog (April 3, 2022)
Lucid Motors (NASDAQ: LCID) is a new player in the EV market with an unsurprisingly volatile stock price. Next to other big names like Ford, General Motors, and Tesla, the company is making huge waves within the industry.
The inventive genius behind the firm, Peter Rawlinson, is the former chief engineer of the Tesla Model S. And his plans of building the best electric car in the world, which is way beyond Tesla’s Model S, has created quite a buzz.
After peaking at $55 during the last quarter of 2021, Lucid Motors stock has picked up a bearish run in 2022. But is that about to change? And will the share price recover in 2022?
Why Lucid Motors stock could go up
Lucid Motors stock is currently trading at around $25. After experiencing multiple peaks and dips throughout the past year, share price is currently following a bit of a downward trajectory.
The recent announcement of the fourth-quarter results, further pushed the stock downwards as the reported results were disappointing for investors. Not only did the EV stock miss its earnings estimates but it has substantially reduced its production outlook for the year.
Despite a rough start to 2022, the group has rolled out what I think are excellent plans. And these could once again spike investor interest in Lucid Motors’ stock.
After a successful launch and response of Lucid Air, in 2021, the business expects to roll out its Gravity performance luxury SUV in 2023. It claims that Lucid Air beats the Tesla Model S and Amazon-backed EV start-up Rivian’s R1T in battery efficiency. Moreover, it’s worth mentioning that Lucid Air won the 2022 Luxury Green Car of the year.
What’s more, management is preparing for geographical growth. The EV start-up plans to build the first international manufacturing facility in the Kingdom of Saudia Arabia. A production ramp-up in its Arizona facilities are already underway. And the group has also announced its plans to expand into the European markets this year.
I think it’s fair to say, Lucid Motors has made a notable impact within the EV sector even if its stock doesn’t reflect this. And with a seemingly sound strategy for the future, the long-term potential for this business looks promising.
What could go wrong?
Lucid Motor faced the daunting challenge of hiring a skilled workforce needed to build EVs with its first model Lucid Air. To meet the ambitious timeline of delivering the first vehicle, it partnered with the City of Casa Grande and county leaders, to construct and outfit a state-of-the-art training centre.
With the second luxury car to be delivered in 2023, will the company be able to manage the task force this time while simultaneously expanding production overseas?
It’s a pretty ambitious strategy in my opinion. And with Lucid Motors’ stock being driven primarily by future expectations of performance rather than existing fundamentals, the slightest sign of trouble could trigger immense levels of volatility.
Should I invest in Lucid Motors stock?
With just one car model in the market, the EV company has grabbed the attention of all the leading carmakers and investors alike. That’s actually why Lucid Motors’ stock soared last year.
But there remains a long road ahead, fraught with risk and operational challenges, which the business might struggle to overcome. After all, the automotive industry is a tough place to operate. Personally, I’m not rushing to add any shares to my portfolio today. Instead, I’m going to keep this one on my watchlist and look elsewhere for investing opportunities.
The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.