Should one Buy, Sell, or Hang onto Lucid Stock?
Lucid Group, the electric vehicle maker with the ticker symbol LCID, saw its shares perk up recently thanks to some impressive production and delivery numbers in 2024. However, Lucid faces a tough road in the constantly evolving EV market, where many other companies are vying for sales. Let's take a deeper look at why investors might keep, sell, or add to their Lucid holdings.
Why You Might Want to Hang on to Lucid
There's a strong case for holding onto Lucid by your fingertips. For starters, the company has produced a top-notch product in its Air sedan, which has garnered numerous awards and boasts a breathtaking 516-mile EPA-estimated range — the longest of any EV on the market.
Lucid's vehicle production and delivery numbers were solid in 2024. The company produced 9,029 vehicles, a 7% increase from the previous year, and deliveries jumped an impressive 71% to 10,241. Though relatively small compared to some other automakers, Lucid is making progress in these crucial areas.
The introduction of Lucid's Gravity SUV is another reason to give the company a thumbs-up. With the SUV market heating up, Lucid will now have EVs in two distinct categories, which could help lower costs by sharing parts between models.
And let's not forget that Lucid's CEO, Peter Rawlinson, mentioned having talks with other automakers about potential partnerships. Such collaborations could help Lucid tap into economies of scale and lessen its financial burden, given its third-quarter losses reached a whopping $992 million.
Why You Might Want to Say Sayonara to Lucid
There could be several reasons to sell off your Lucid shares, including:
- You need the money for something else
- Your original investment thesis has shifted
- You believe there are better investment opportunities out there
- You've reached your desired level of risk in this stock
Lucid's shares have plummeted 93% in the past three years, so it's unlikely they represent a significant chunk of your portfolio. However, if your reasons to sell meet any of the above bullets, it might be time to part ways.
Better investment opportunities could be in the form of artificial intelligence-related stocks, as Spending on AI data center infrastructure may reach $2 trillion over the next five years, according to Nvidia's CEO. Many leading AI companies are already seeing significant share price gains.
Should You Even Consider Buying Lucid?
It might be tempting to see Lucid's share price of $2.96 and think it's a steal. But Lucid has a hefty price-to-sales (P/S) ratio of 9, which is significantly more expensive than that of electric vehicle start-up Rivian Automotive (P/S ratio: 3).
Lucid's losses hovered at $992 million in the third quarter, and it will have to sell many, many more vehicles to start seeing a turnaround. Its high-end models may be too pricey for many individuals – the Gravity SUV starts at $94,900, with a cheaper alternative coming later this year.
Unless Lucid can drastically reduce its costs and significantly increase its sales, it might be best to steer clear of its stock. However, Lucid's innovative battery technology and consumer interest could offer some encouraging signs for the future.
Given the current financial situation of Lucid, some investors might consider selling their shares due to the company's high-priced models and substantial losses, as highlighted in the third quarter with a $992 million deficit. Alternatively, investors who are looking for opportunities in artificial intelligence may find better investment prospects in AI-related stocks, considering the potential growth of AI data center infrastructure over the next five years, as predicted by Nvidia's CEO.
Based on Lucid's hefty price-to-sales (P/S) ratio of 9, which significantly outweighs that of electric vehicle start-up Rivian Automotive with a P/S ratio of 3, it might be challenging to justify purchasing Lucid shares at its current price of $2.96 unless the company can significantly reduce its costs or boost its sales volume.
