Luxury electric vehicle maker Lucid Group (NASDAQ: LCID) saw its stock tumble 13.8% in the afternoon session following a bearish call from Bank of America. The investment bank downgraded Lucid from Neutral to Sell and slashed its price target from $3 to $1, citing concerns over long-term profitability despite improved execution in Q4 2024.
Breaking Down Lucid’s Q4 Performance
Lucid delivered a mixed fourth quarter, exceeding analyst expectations in several key areas. The company reported:
- Deliveries: 3,099 vehicles, up 79% year-over-year.
- Revenue: Beat expectations despite industry-wide EV challenges.
- EBITDA: Showed improvement, but profitability remains out of reach.
Lucid’s margins improved, signaling better cost management. However, as competition intensifies in the EV market and demand softens, concerns about its ability to achieve sustained profitability persist. The company has set an ambitious 2025 production target of 20,000 vehicles, but leadership changes add an element of uncertainty.
Market Reaction: Overreaction or Justified Concern?
Lucid’s stock has a history of volatility, experiencing 54 moves greater than 5% in the past year. While sharp declines can sometimes present buying opportunities, today’s 13.8% drop suggests a major shift in investor sentiment.
This isn’t the first time Lucid has faced such a dramatic downturn. Four months ago, shares plunged 19.5% after the company announced an underwritten public offering of 262 million shares to raise capital. Additionally, Saudi Arabia’s Public Investment Fund (PIF), Lucid’s largest shareholder, agreed to acquire 375 million shares in a private placement, maintaining a 58.8% ownership stake. While this raised $1.67 billion for Lucid, the dilution negatively impacted the stock price.
Lucid’s Long-Term Struggles and Stock Performance
Lucid is down 25.6% year-to-date, trading at $2.26 per share, which is 47.1% below its 52-week high of $4.26 from August 2024. Investors who bought at Lucid’s September 2020 IPO have seen their investment plummet—$1,000 invested at IPO is now worth just $228.01.
