Thursday, February 22, 2024
Stocks To Sell

These 3 Big Funds Are Betting Against Lucid. It’s Time to Join Them.

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Without a doubt, some drivers and financial traders like electric vehicle (EV) manufacturer Lucid Group (NASDAQ:LCID). However, not everyone expects LCID stock to gain value in the coming months. Lucid Group’s next earnings report, scheduled for May 8, could be a disaster. Plus, Lucid is preparing to launch an electric SUV, but there’s no guarantee that this will boost the share price anytime soon.

It’s generally a good idea to keep track of short-selling activity. This can help investors gauge the big-money sentiment surrounding a stock. So, we’ll take a look at several funds that have reportedly placed short bets against Lucid Group.

That being said, it’s important to check the relevant facts and circumstances surrounding any company and stock. It’s your money, so be sure to form your own conclusion about Lucid Group’s future prospects. After all, short-selling can carry a high level of risk. However, even if you’re not into short-selling, there are compelling reasons not to invest in Lucid Group.

What Funds Are Betting Against LCID Stock?

Courtesy of Fintel, I identified multiple funds that involve short positions in LCID stock. Late April filings indicate that these three funds held short bets against Lucid Group:

  • K2 Alternative Strategies Fund Class A: A mutual fund with the ticker FAAAX sold short 41,213 shares of Lucid stock.
  • Noble Absolute Return ETF (NYSEARCA:NOPE): This fund only sold short 100 Lucid shares, but it’s still a bet against the company.
  • Boston Partners Global Long/Short Fund Institutional Class: This mutual fund with the ticker BGLSX took a sizable short position of 38,222 shares against Lucid Group.

It’s hard to know exactly why these funds chose to wager against LCID stock. Still, I can make an educated guess. Perhaps, they weren’t impressed with the fact that Lucid produced 2,314 EVs in 2023’s first quarter but only delivered 1,406 vehicles during that time.

Get Ready for a Downbeat Quarter With Lucid Group

Furthermore, the short-sellers might be concerned about Lucid Group’s track record of one unprofitable quarter after another. Will the automaker’s first-quarter 2023 financial results be any different? Not likely, as Lucid has been income-negative since 2020.

Maybe some traders are bullish on LCID stock because Lucid Group recently touted its Lucid Gravity electric SUV. Not long ago, Lucid disclosed that the Gravity vehicle model is “now testing on public roads throughout the U.S.”

Lucid Group CEO Peter Rawlinson is certainly a big talker, as he claims that his company is “in a place where the Gravity is positioned to change the world of SUVs.” Hopefully, there won’t be a recall on the Gravity, like there was with the Lucid Air sedans due to power-loss risks.

In any case, CNBC reported that Lucid Group has delayed deliveries of the Gravity SUV until 2024. Consequently, there’s no way to gauge the success or failure of this vehicle model’s commercialization in the near term.

Don’t Take Any Chances With Lucid Stock

It’s a risky bet to short-sell Lucid stock, so cautious investors should leave that to big-money funds. Still, it’s wise to keep tabs on Lucid Group and take note of the automaker’s financial shortcomings.

Certainly, it will be interesting to see how Lucid Group performed in Q1 2023. It’s practically guaranteed that the company will still be unprofitable. Moreover, it will be a while before Lucid finally delivers Gravity SUVs to the public. All in all, it’s easy to see why some funds would bet against LCID stock, and it makes sense for investors to steer clear of it in 2023.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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