Lucid Motors' Shares Surge on Analyst Feedback Despite Market Skepticism

Lucid Motors (LCID 5.22%) saw its stock climb by 5.2% during trading on Thursday, echoing data from S&P Global Market Intelligence. A driving force behind this uptick may very well be the insights from a stock analyst.

Morgan Stanley's automotive equity analyst Adam Jonas shared his thoughts on the luxury electric vehicle (EV) maker before market hours. Despite maintaining an 'underweight' stance on Lucid, Jonas suggested that Lucid's current challenges are adequately mirrored in its stock price.

The EV manufacturer is set to announce its fourth-quarter financials on February 21st after the closing bell, with Jonas hinting that the stock might not face substantial further decline based on the upcoming report or subsequent earnings call. Given that the company has already released its production and delivery figures for the quarter, which had previously sparked a sell-off, his prediction contains substance.

Lucid's Investment Attractiveness

Lucid's production figures showed an increase to 8,428 vehicles for the last quarter of 2023, a 17.4% year-over-year rise. Yet considering the scale of manufacturing growth needed for cost efficiencies, this increase didn't greatly impress. Meanwhile, the company achieved a 37.4% increase in deliveries, handing over 6,001 vehicles in Q4. Jonas' perspective that much negative sentiment may be 'baked in' to Lucid's valuation could be accurate, even though his overall view on the stock remains cautious.

The stock's boost following Jonas' comments also coincided with Lucid's announcement of significant price reductions for its Air Pure, Air Touring, and Air Grand Touring models, now starting at $69,900, $77,900, and $109,900, respectively. These reductions aim to stimulate sales but suggest short-term increased losses for Lucid.

While the EV sector is forecasted to grow in the long run, demand could taper off in the near term, prompting Lucid's proactive price adjustments. With approximately $4.4 billion in cash and equivalents at the end of the third quarter, Lucid also reported a weighty net loss of $752.9 million. For a profitable future, the company must enhance its production and sales significantly and sustain pricing strength. There's potential for Lucid's stock value to climb, yet entering this investment carries considerable risk, given the current shaky business fundamentals.

Lucid, EV, Stocks