Lucid (NASDAQ:LCID)
When the SPAC started trading some years ago, Lucid (NASDAQ:LCID) stock was a roller coaster ride. Truth be said. Forget about Lucid turning a profit any time soon. A company’s past failures are irrelevant if it grows to compete well with Tesla in the future.
The Lucid lineup is adaptable, with cars priced anywhere from $87,000 to $250,000. Because of this, “everyone” can find a Lucid that suits them. Production at the firm needs to be significantly increased in the upcoming years.
As an added bonus, Lucid’s distinctive appearance, branding, and performance are reminiscent of more expensive Teslas. And thus, Lucid is the company I’m putting my money on if another 100% EV manufacturer challenges Tesla’s dominance in the years to come. Also, there are some worries that Lucid may need help to meet manufacturing predictions. However, this is something that happened to Tesla many years ago.
PIF, a Saudi Arabian wealth fund, upped its holding in Lucid last quarter and now owns nearly 66% of all shares. There is talk of a prospective buyout from the Saudi government in the near future, and we have heard rumors of this.
Whether or not the Saudis take out Lucid fully, the business can increase manufacturing, with annual deliveries expected to range from 10,000 to 14,000. Moreover, output in 2024 is expected to increase substantially, leading to a significant increase in the firm’s share price in the following years.
Experts are snoozing at the wheel since the lowest sales and EPS predictions might be exceeded. Hence, as I anticipate a further spike in the price of Lucid, I have decided to double my current holdings.
This is the Bottom of the Technical Picture
Nonetheless, Lucid’s stock price reductions before the latest weak market have accelerated during the current downturn. Lucid’s price fell from its all-time high (ATH) in early 2021 to its latest low at the beginning of 2023, a decline of over 90%. Theoretically, Lucid was grossly undervalued heading into the end of the year, but it finally managed to bounce back. In more recent news, we were informed of PIF’s growing stake in Lucid and the possibility of a buyout in the near future. Shares surged, and I cashed out at the highs before restarting my position near $11 and tripling down in the $8-$9 zone.
Lucid should now be able to close the $10 deficit and continue rising. The share price of Lucid might rise significantly in the coming years, and the Saudis are likely to acquire the company at a significant premium to its present valuation. Thus, Lucid shares have a limited downside. However, there is still much room for upside, and this company should increase substantially in the intermediate and long term.
A Brief Description of Air Vehicle
The fact that Lucid produces 100% EV premium cars with some of the greatest performance of any EV manufacturer gives me cause to be hopeful about the business. The performance of a Lucid vehicle is so high that it can easily compete with Tesla. For instance, the Air Grand Touring model from Lucid has a maximum horsepower of 1,050 and a range of 516 miles. This vehicle’s base price is roughly $138,000. Yet, its performance capabilities are on a level with or better than many much more costly automobiles. In addition, Lucid provides the Air Sapphire, which just smashed the quarter mile in 9.1 seconds, making it faster than the newest Ducati motorbike, the Bugatti Chiron, and the Tesla Model S Blue.
This means that Lucid has access to some of the most cutting-edge EV technology, putting it in a position to challenge Tesla’s current market supremacy in the years ahead. Of course, only a select few can afford the $250K for an Air Sapphire or the $87K for the base model Air Pure. Yet as the business develops, it will follow Tesla’s lead and begin offering mass-market automobiles at lower prices to increase its portion of the growing market for pure electric vehicles.
The PIF: Saudi Arabia’s Source for New Ideas
A fascinating group, the “PIF” has been established. More than that, it is a central sovereign wealth fund. This sovereign wealth fund in Saudi Arabia holds around 66% of Lucid shares, which are now valued at approximately $10.5 billion. Moreover, the PIF raised its holdings in Lucid during the previous quarter. The Saudis may attempt to acquire Lucid via the Public Investment Fund (PIF) or the Saudi government. The PIF has a lot of money, so having them as prominent investors and owners is great for Lucid. This means they have a lot of time to improve their production efficiency, raise their sales, and turn a profit.
Low Revenue Predictions that Can’t Be Ignored
The expected revenue for this year is $1.33bn. But this year, Lucid anticipates delivering between 10,000 and 14,000. We may predict 2023 sales revenue of about $1.68 billion if we use the midpoint of these forecasts (12,000 automobiles) and an average selling price “ASP” of roughly $140,000. Deliveries are expected to skyrocket as Lucid increases manufacturing capacity, which will significantly boost income in 2024. Indeed, we’d want the stock in our possession far before then, and now would be an excellent opportunity.
What Lucid’s finances may look like in the future
Lucid should fetch a higher P/S multiple if it can convince the market that it can significantly boost production and delivery in the following years. I’m using a conservative peak value of seven times revenues. We may still see significant price growth in the years ahead. Yet because of PIF support, Lucid can keep expanding rapidly even if it only turns a profit for a short time. So, Lucid’s stock has little downside and almost unlimited upside.
Risks to Lucid
There are dangers with Lucid, but I am optimistic about it. Problems with manufacturing might dampen Lucid’s rapid revenue expansion. And the longer the firm goes without making a profit, the lower its multiple will be. On top of that, Tesla and other manufacturers have upped the ante in competitiveness. As a result, the comparatively high price of Lucid’s cars might cause demand problems for the company. Sales may be affected by the downturn, and the stock may be more volatile in the near future. Before putting money into Lucid stock, investors should weigh these and other potential downsides.
Featured Image: Megapixl © Iandewarphotography
