Why Lucid Stock Jumped 14% in August but Is Falling Back
Investors in Lucid Group (NASDAQ: LCID) found some respite in August as shares of the luxury electric vehicle (EV) maker jumped 14.2% in the month, according to data provided by S&P Global Market Intelligence. The stock appears to be struggling to maintain momentum, though, and has already dropped 10.9% so far this month, as of this writing.
What's going on with Lucid?
Lucid's next EV is going into production
Lucid was struggling with low production and sales, but its second-quarter numbers released in August lifted investors' hopes. Deliveries jumped 70.5% year over year to 2,394 units, while it produced 2,110 units during the quarter, up around 22% sequentially.
More importantly, revenue jumped 33% year over year to $201 million, beating analysts' estimates. Higher revenue reflects better selling prices after a lull that forced Lucid to slash the prices of its EVs in response to competition and an industry price war. Management reiterated its full-year production guidance of 9,000 units.
Lucid gave investors another reason to cheer when it raised $1.5 billion in funding in August from an affiliate of Saudi Arabia's sovereign public fund, the Public Investment Fund (PIF).
The PIF is also Lucid's largest shareholder with a 59.8% stake as of Dec. 31, 2023, and the EV maker expects the latest funding to provide enough liquidity through at least the fourth quarter of 2025. On top of the funding, Lucid ended the second quarter with total liquidity of nearly $4.3 billion.
The PIF funding comes ahead of the launch of Lucid's Gravity SUV, an EV the company and its investors are betting big on. In an interview at the Monterey Car Week event in California last month, CEO Peter Rawlinson said the Gravity could more than double Lucid's sales, and that its addressable market is six times that of its only EV, the Lucid Air.
What's next for Lucid stock?
Lucid expects to start production of its SUV this year and has another new midsize SUV lined up for launch, with production expected to start in late 2026.
But it remains a loss-making company and continues to burn cash. Its net loss, in fact, widened by around 3% to $790 million in the second quarter despite higher revenue. Lucid would be a cash-strapped company if not for the PIF's backing. The company's losses could also rise further as it pumps more money into Gravity.
These are just some of the risks that investors are taking note of, which partly explains why Lucid stock is falling back after last month's run-up.
Lucid's stock could rise as the company nears production of its Gravity, but only time will tell whether the SUV can steer it onto a growth path as anticipated. This uncertainty could mean some more volatile days for Lucid stock.
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
