Founded in 2007, electric vehicle (EV) manufacturer Lucid Group, Inc. (NASDAQ: LCID) has been a solid wealth creator, as its stock has jumped 65% since its listing in September 2020.
In its recent first-quarter results, the company posted revenues of $57.7 million, up from $0.3 million in the same quarter last year. Its loss in the first quarter narrowed to $0.5 per share from $3.36 per share a year ago.
Recently, the company announced a hike in vehicle prices that came into effect on June 1. Further, the company has also joined hands with Bank of America (BAC) to launch Lucid Financial Services, a digital platform that offers a flexible, fast and easy financing process, including lease and loan purchase options, to Lucid Air customers.
Keeping this in mind, let’s have a look at some of Lucid’s major risk factors.
As per TipRanks, Lucid’s top risk categories are Finance and Corporate and Production, which contribute 28 and 24 risks, respectively, to the total 85 risks identified for the stock.
Under the Finance and Corporate Risk category, Lucid informs its shareholders that risks arising from accounting and financial operations are the major headwinds for the company.
The company also highlights that it has no plans to pay any dividends in the foreseeable future. Lucid expects to use its future earnings to grow its business. The company expects to incur losses on the back of various development and expansion activities and does not see making profits anytime soon.
Meanwhile, the company’s primary risk within the Production category remains manufacturing.
The company underlines that it may face operational headwinds in the form of delays, limitations and risks related to environmental and other operating permits.
The EV maker highlights that fluctuations in operating costs, product demand and production levels may significantly impact its financial results. Further, vehicle recalls and lithium-ion batteries catching fire remain major concerns for the company.
Overall, the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on two Buys and one Sell. LCID’s average price target of $31 implies that the stock has upside potential of 86.75% from current levels. Shares have declined 60.2% over the past year.
TipRanks’ Stock Investors tool shows that top investors currently have a Neutral stance on LCID, as 0.9% of the top portfolios tracked by TipRanks increased their exposure to LCID stock over the past 30 days.
Lucid’s primary risk factors can result in significant operational headwinds for the company, hurting its growth prospects. However, its encouraging first-quarter results can be something upon which the company can build a solid base for future growth.
Read full Disclosure