Thursday, April 25, 2024
Stocks To Sell

Stay Far Away From F-Rated LCID Stock

Source: gg5795 /

Lucid Group (NASDAQ:LCID) stock has been a poor performer in 2022, to put it politely. Do the electric vehicle maker’s financials justify a turnaround to the upside? The answer is definitely no, and Lucid’s attempt at an economy EV won’t likely convert today’s inflation-wracked consumers into buyers.

Lucid Group loves to talk about luxury in its press releases. Okay, we get it – Lucid’s vehicles are fancy and fast. On the other hand, do drivers in real-life situations really need an EV that can go from zero to 60 miles per hour in 3.4 seconds?

That’s fine for race cars on a privately owned track somewhere, but Lucid Group seems more interested in extreme luxury than in practical reality. Meanwhile, financial traders might seek excitement by investing in Lucid Group, but all they’ll probably get is an unhealthy dose of disappointment.

What’s Happening with LCID Stock?

After topping out early this year at around $45, LCID stock has consistently punished its faithful investors. Now the shares trade at less than $9 apiece.

When will the bleeding stop? That’s certainly a thought on the minds of Lucid Group’s shareholders. A better question, though, is: Why should the bleeding stop?

After all, Lucid Group’s financials are far from ideal. First of all, Lucid’s balance of cash and cash equivalents dwindled from $6.26 million at the end of last year, to just $1.26 million at the end of 2022’s third quarter.

Is it possible that Lucid Group will run out of money to fund its operations in 2023? This is a question that prospective investors should take seriously. They should also observe that Lucid’s already alarming net earnings loss of $497.05 million from 2021’s third quarter, ballooned to a staggering $687.52 million net loss in Q3 of 2022.

Lucid Group’s Vehicles Are Prohibitively Priced

During times of high inflation and a potential recession, automakers need to be flexible with their pricing. They can talk about luxury all day long and brag about cars that go from zero to 60 miles per hour in a few seconds – that’s all fine and well, but it’s pointless if people can’t afford the vehicles.

It’s easy to find press releases from Lucid Group that don’t mention prices. Perhaps, it’s because Lucid’s management knows full well that the prices would shock and appall some potential customers.

To get a glimpse of how Lucid has priced its vehicles, we viewed a report from the Silicon Valley Business Journal. According to that report, Lucid Group’s lowest-price EV model, the Air Pure, starts at $87,400. That’s rather pricey for an automaker’s most affordable vehicle during these challenging economic times, wouldn’t you agree?

Lucid’s line of Pure Electric Vehicles is even more prohibitively priced starting at $107,400. Then, there’s the Grand Touring line, which starts at $154,000. Plus, Lucid plans to roll out its Air Sapphire models, which will start at an eye-watering $249,000.

What You Can Do Now

Did Lucid Group’s management get the memo that inflation is high and many people can’t afford these ultra-pricey vehicles? Also, are they aware that having a dwindling capital position and a widening net earnings loss is a major problem?

These are tough but valid questions, and Lucid Group’s investors should demand straightforward answers. Until then, LCID stock deserves an “F” rating and shouldn’t be on anybody’s watch list now.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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