Just a few years ago Lucid Group (LCID) was one of the most exciting stocks on the market, soaring to more than 430% above its IPO price of $10.25/share. Since then, the stock has plummeted to just $2.69/share – with no signs of slowing down anytime soon.
The EV manufacturer has been compared to Tesla, but looking into production processes reveals stark differences between the two companies. For every vehicle Tesla manufactures, they make $8,431. Meanwhile, Lucid is losing $227,000 per car production!
Its COGS is 3x revenue, and something has got to give. The company is burning through $3.6 billion with just $4.4 billion in reserves. In other words, the clock is ticking for Lucid.
But it is not just about profitability challenges, production is struggling too. While Tesla makes a million cars every quarter (at a profit), Lucid barely brings 10,000 vehicles to market quarterly.
So, why is LCID still trading at a higher valuation than its superior rival TSLA? Last year we wrote about the Saudi Arabia PIF (Public Investment Fund) acquiring a massive stake in the company. This is giving investors a false sense of security.
Sure, the PIF is a safety net that continues to inject Lucid with cash as needed – like $3 billion just last summer. And it’s true that the Saudi government views the EV manufacturer as its pioneer in cleaner energy.
But, the fund will only put up with poor performance for so long before writing off Lucid as a loss and moving on to a new opportunity. That being said, it may be time for you to cut losses on LCID yourself if you haven’t already. The stock has tumbled another 44% in the past month, and 16% this week alone.
In fact, we’ve taken a look at this stock through the VectorVest stock analyzer and discovered 3 red flags you need to see for yourself.
LCID Has Poor Upside Potential and Safety With Very Poor Timing
The VectorVest system has outperformed the S&P 500 index by 10x over the past two decades and counting. It simplifies your trading strategy to save you time and stress while empowering you to win more trades.
You’re given all the insights you need in 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each sits on its own scale of 0.00-2.00 with 1.00 being the average for quick and easy interpretation.
It gets even easier, though. You’re given a clear buy, sell, or hold recommendation for any given stock at any given time based on the overall VST rating for a stock. Here’s what you need to know about LCID right now:
- Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted three years out) to AAA corporate bond rates and risk. It’s a much better indicator than a simple comparison of price to value alone. LCID has a poor RV rating of 0.79 right now even after losing 95% of its value.
- Poor Safety: The RS rating is a risk indicator. It’s derived from a calculation of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. LCID has a poor RS rating of 0.56 right now.
- Very Poor Timing: As you can see by looking at the stock’s performance, LCID has a very strong negative price trend pushing it lower and lower. The RT rating of 0.22 is very poor. This rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 0.55 is poor, and VectorVest rates this stock a SELL right now. Learn more about the rationale behind this recommendation with a free stock analysis today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. LCID is bleeding money on every vehicle it produces while the stock has lost 95% of its value. It has poor upside potential and safety with very poor timing.
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