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Lucid’s Future Growth Unclear

Stock MarketsOct 11, 2021 08:01AM ET
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© Reuters. Lucid’s Future Growth Unclear

In 2007, Lucid Motors (LCID) introduced itself as an enterprise that develops next-gen electric vehicle technology. Since the beginning, Lucid has been both praised and criticized. Recently, this company has been gaining investors' trust and has been rallying nicely.

On July 23rd, Lucid Motors went public after merging with Churchill Capital Corp IV.  The company made its debut on the Nasdaq, and now operates under the name Lucid Group (ticker symbol LCID and LCIDW). This merger provided funding of approximately $4.4 billion to Lucid to facilitate the company's growth.

Using this capital, the company plans to launch its first in-house electric car, the Lucid Air, at the end of 2021. 11,000 paid reservations have already been made for this vehicle. Deliveries for the Lucid Air are expected to begin in earnest later this month.

LCID stock, like many EV stocks, has been shrouded in skepticism of late. Various growth investors tout the potential of this company. However, bears tend to focus on the company's valuation as a reason to stay away. I remain on the fence with LCID stock, holding a neutral view right now.

See Top Smart Score stocks on TipRanks >>

The Post-Merger Hype

That's not to say there isn't reason to be bullish on LCID stock. Indeed, the post-merger hype around this company has been incredible. With deliveries of the Lucid Air expected to really ramp up this quarter, investors will get a good look at how this stock's growth trajectory looks in early 2022. Accordingly, investors bullish on Lucid's potential have reason to jump into this stock now.

This merger went through relatively smoothly. The formation of Lucid Group has been approved and cheered upon by investors. Post-merger, Churchill IV has taken itself off the NYSE and shifted all its shares to operate under LCID. Peter Rawlinson, CEO of Lucid Motors, continues to lead the post-merger company.

Let's now get to why this SPAC merger has been so hyped. The capital raised by this merger is being used to expand the company's factory in Arizona by 2.7 million square feet. This expanded space will be used to increase the company's manufacturing capacity, allowing Lucid to benefit from rising demand over time.

Those bullish on Lucid's long-term prospects will like this investment.

Indeed, the company's recent stock price movements have indicated a cautiously optimistic view of LCID stock. As LCID debuted on Nasdaq, its price shot higher by 19%. That said, since then, a series of selloffs and rallies have resulted in this stock trading in a relatively wide range. Investors are still trying to assess the true value of this early-stage EV growth stock.

Whether Lucid can live up to the hype remains to be seen. However, analysts remain reasonably bullish on LCID stock. Let's take a look at what the experts think in terms of where Lucid could be headed from here.

What are Analysts Saying about LCID Stock?

As per the TipRanks' analysts rating consensus, Lucid Group is a Moderate Buy. Out of 3 analyst ratings, there are 2 Buy recommendations and 1 Sell recommendation.

This stock has an average LCID price target of $23.33. Analyst price targets range from a high of $30 per share to a low of $12 per share. 

Bottom Line on Lucid

When we compare Lucid Group to its EV competitors, the company's stock price performance has been less-than-stellar. Of course, Lucid doesn't have the track record of growth many of its peers have shown. In this way, LCID stock is more of a leap of faith for investors.

Indeed, the luxury EV market is one that's beginning to look a bit crowded. Lucid's ability to grow will really depend on the company's ability to generate positive buzz within the EV community. Again, the jury's out in this regard.

Accordingly, investors looking at LCID stock as a potential growth play in a well-diversified portfolio may want to wait to see how this first quarter goes. This is a stock with an uncertain outcome right now. Thus, a wait-and-see approach appears to be what the overall market is looking at right now with LCID stock.

Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

Lucid’s Future Growth Unclear

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