These are not the best of times to be selling EVs, and even more so if they are expensive ones. Those are the kind Lucid Group (NASDAQ:LCID) sells and it hasn’t helped the company’s case much again if the latest quarterly update is anything to go by.
The luxury EV maker’s Q4 results failed to lift already depressed sentiment, with the shares falling 17% in the aftermath. Revenue saw a 38.9% year-over-year decline to $157.51 million, falling shy of the consensus estimate by $24.25 million. The company posted a loss of $654 million, or 29 cents a share, vs. the same period last year’s loss of $473 million (28 cents a share), although the figure was in-line with Street expectations.
After producing 8,428 vehicles in 2023, the 2024 guide is factoring in production of around 9,000 vehicles, with the company noting that demand remains the issue rather than supply. Its Arizona manufacturing plant can produce 30,000 vehicles a year, and once Phase 2 is completed, that will expand to 90,000.
The company also said a lower-cost midsized vehicle is expected to enter production toward the end of 2026. Baird’s Ben Kallo expects the model will go head-to-head against Tesla’s Model 3/Y in size and price point, which the analyst thinks will “meaningfully expand LCID’s TAM (management discussed a potentially 20x larger market).”
Kallo also thinks the recent 10% price reduction to $69,990 for the starting price of the Lucid Air Pure is a good move. “While generating cash and boosting sales are a concern for the early stage manufacturer, we believe the cuts will potentially stimulate demand as the company bridges the gap until the initial production of the Lucid Gravity SUV later this year,” he explained.
All told, the analyst takes a balanced view of Lucid’s prospects going forward. “Q4 results were lower to in-line vs. our/consensus estimates as LCID navigates the challenging environment for EVs at high price points,” the analyst summed up. “We continue to believe in LCID’s technology, but see 2024 as a difficult year with high interest rates and a high price point for LCID’s vehicles.”
For now, Kallo remains on the sidelines with a Neutral rating while his price target is lowered from $6 to $4. Still, there’s potential upside of ~31% from current levels. (To watch Kallo’s track record, click here)
Kallo’s take gets most of his colleagues’ nod of approval. The stock claims a Hold consensus rating, based on a mix of 7 Holds and 2 Sells. That said, plenty think the shares are somewhat undervalued; going by the $5 average price target, in 12 months’ time, the shares will be changing hands for a 47% premium. (See Lucid stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
