There’s been some positive Lucid Group (NASDAQ:LCID) stock, but it hasn’t translated into a positive and permanent change in price trends. Shares initially rallied on better-than-expected deliveries, but quickly reversed. The stock reached a new 52-week low recently.
Investors may have absorbed the delivery-beat news and are once again focusing on the largest issues affecting the performance of the company and its shares. Despite the stock being “priced for disaster,” these problems will persist. A further slide in price remains very likely.
Lucid Stock: Some Good, Some Bad With the Latest Company Update
On April 9, Lucid Group released its EV production and delivery numbers for the quarter ending March 31, 2024. During the quarter, the company produced 1,728 vehicles, and delivered 1,967 vehicles. These results made Q1 2024 a record quarter for Lucid.
As mentioned above, these figures came in above estimates. Prior to the deliveries data release, analysts called for the electric vehicle manufacturer to deliver 1,745 vehicles during the quarter.
Yet while this promising deliveries news did result in a modest rally for Lucid stock on April 9, shares quickly coughed back these gains, and then some, over the subsequent trading days.
Again, investors are perhaps shifting focus back towards the negative factors at play with LCID. Interestingly enough, alongside the positive news of a deliveries beat, this latest update from the company contained some other information that may not necessarily give cause to be optimistic.
Namely, price cuts were for sure a big reason for these better-than-expected deliveries numbers. As you may recall, Lucid slashed prices for its Air family of EV sedan models. A decline in gross margins likely came with this sales boost. Also, while deliveries went up, production went down during the quarter.
Many Years Away from a Lackluster Potential Payoff
Lucid stock bulls may concede the negative aspects of the aforementioned update yet still argue that things are starting to move in the right direction for this fledgling company. However, a look at other factors signals that the situation with Lucid isn’t necessarily turning a corner.
For the full year 2024, forecasts still call for Lucid to deliver just 9,000 vehicles. Other early-stage EV manufacturers, like Rivian Automotive (NASDAQ:RIVN), are already at annual production and deliveries in the five-figure range.
That’s not all. Lucid is expected to burn through $3.3 billion of its nearly-$6 billion in total liquidity just this year alone. Lucid will likely keep raising money from Saudi Arabia’s Public Investment Fund, but, as I’ve argued previously, further dilution means LCID will keep spiraling down to lower prices.
Moreover, the payoff for investors could be lackluster, and arrive many years into the future. As InvestorPlace’s Eddie Pan pointed out last week, forecasts call for Lucid to only get out of the red in 2030. Estimated earnings of 6 cents per share that year aren’t exactly much to get excited about.
The Verdict: Staying Away Remains Your Only Choice
If it’s not disheartening enough to hear that Lucid is still very far away from reaching profitability, keep in mind that this may just be the “best case scenario” for this company. Between now and the start of the next decade, Tesla (NASDAQ:TSLA) could cement its lead in the passenger EV space.
Incumbent automakers, especially incumbent European automakers, stand to further expand their share of the luxury EV market if and when electric vehicle demand picks back up. Considering this uncertainty, it makes even less sense that LCID trades for 41.5 times estimated earnings six years out.
Small bits of positive news could keep driving small, short-lived rallies, but expect the long-term trend to stay the same. With a steady slide to persist, staying away from Lucid stock remains the only choice to make.
On the date of publication, Thomas Niel did not hold (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.