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Multiple Catalysts for Upside to Sustain By TipRanks

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© Reuters. Lucid Stock: Multiple Catalysts for Upside to Sustain

Lucid Group, Inc. (LCID) hasn’t done much in the last six months.

The stock fell to $16.12 at the end of September, but a dramatic rally followed and LCID trades now for around $26. (See LCID stock charts on TipRanks)

I am bullish on Lucid, with multiple stock upside catalysts on the horizon.

In the coming decade, the EV industry will grow at a rapid pace. The competition is also increasing. Bloomberg estimates that there will be more than 500 EV models worldwide by 2022.

It’s innovation that will set companies apart. Lucid Motors appears to be making investments in this area. Lucid Air Dream Edition R boasts the longest-range EV rating ever given by the EPA. This car can go 520 miles with a single battery charge.

It’s also worth noting that the Lucid Air Dream Edition has over 10,000 reservations. Potentially, this could mean revenue visibility of up to $900 million. In 2021, the first deliveries will be made.

Ambitious Growth Plans

Lucid seems to be making elaborate plans for aggressive geographic expansion. Already, the company has 2,300 employees and is present in North America, Europe, and Middle East.

Lucid Air models are expected to lead initial sales. The company’s first SUV, Project Gravity, is expected towards the end of 2023.

Lucid CEO Peter Rawlinson suggested that a $25,000 model might soon be available. Lucid’s first models were aimed at the luxury or premium market. However, mass-market cars could be an opportunity to change things.

Lucid Motors expects to generate revenues of $2.2Billion in 2022. Lucid Motors expects to grow revenues to $13.9 million by 2025. It appears that this scenario is optimistic.

Lucid Motors, however, is well placed to take advantage of the technology-edge industry outlook. Already, the company has 321 patents issued in the U.S. as well as internationally.

Funding Growth Unlikely To Be a Challenge

Even with optimistic growth estimates, Lucid Motors has guided for an extended period of cash burn. The company anticipates a negative cash flow of $7.5 million between 2022-2024.

Lucid has only been fully funded through 2022. There is an opportunity for equity dilution to impact stock.

If vehicle deliveries are strong, however, then the stock should remain in an upward trend. It’s also worth noting that Lucid Motors plans to outsource its production technology to other original equipment manufacturers. This could be another potential source of cashflow upside.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, LCID stock comes in as a Moderate Buy, with two Buys and one Sell assigned in the past three months.

The average LCID share price target of $23.33 is indicating a 9.7% upside potential from the current levels.

The Final Verdict

Lucid is already opening multiple retail and service locations in the United States and Canada. It plans to deliver vehicles in Europe and Middle East during the second quarter of 2022.

Encouragement of initial deliveries could be a way to increase stock upside. Its SUV and mass-market potential electric car could be game-changers in the long term.

LCID stock merits consideration due to specific company factors as well as a long-term industry tailwind.

Disclosure: Faisal Humayun didn’t hold any positions in the securities discussed in this article at the time it was published.

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