LCID stock is in a cycle wave zig-zag right now. This is a risk-off kind of market and may be a good opportunity for some contrarians to buy shares. The company, Lucid Group, is a maker of electric vehicles. The company was founded in 2007. It is headquartered in Newark, California.
LCID stock is down more than 8%
LCID stock is down more than 8% in after-hours trading Tuesday. Investors fear the shelf filing will create share dilution and that Lucid will need to sell more shares to raise capital. These concerns have been a part of the risk-off market environment since the Fed began hiking rates.
It’s not surprising that Lucid’s stock has declined. The company has lost 60% of its value this year due to broad-based market weakness. Its stock has also been underperforming its peers. For example, Rivian (RIVN) is down more than 3% on Tuesday, while Zim Integrated Shipping (ZIM) is down more than 5%.
In the third quarter, Lucid delivered 1,398 vehicles to customers. The company missed top- and bottom-line expectations, but Lucid said it increased production during the period. The company expects to produce 6,000 to 7,000 units in the first half of 2022.
The company is burning $2.8 billion per year in cash. The firm has a substantial order book of 34,000 vehicles. It is expected to launch a new car early next year. But it’s unclear how quickly production will ramp up.
LCID stock is in a cycle wave zig zag
LCID is currently down 71% yearly, but a closer look at the charts revealed that the company is actually in a cycle wave zig zag. The stock has completed a 1.618 intermediate C wave and is returning to the elevens. The company has also announced that it will sell 916 million shares of its shares to a Saudi Arabian firm, the May 3 Investment Company. So who knows where the stock will go next? The company focuses on reducing its debt load to $1 billion in the short term. But with rising interest rates and a weakening dollar, the company is in for a rough road ahead. In addition, Lucid has a patent on its new battery tech, which is bound to make its stock more expensive. The company will also sell 600 million dollars worth of its stores to a group of investors led by Citigroup.
The best news is that the LCID will sell for at least USD 10 soon. If you are a long-term investor, you should be able to cash in on the action if you are willing to wait for it. The stock will eventually get back to the $11 area.
LCID stock is in a risk-off nature of the market
Despite its success, Lucid Motors is still in a risk-off market environment. As a result, its production targets are not hitting the mark,, and input costs have increased. This has led to Lucid missing both top and bottom-line expectations.
The company’s vertically integrated business model will help provide competitive profit margins at scale. However, the EV market is not without challenges. It is also facing several supply chain problems.
As the EV race heats up, Lucid works to speed up its victory. The company plans to launch its following product in 2023. Earlier this month, it announced a software update for its flagship car. This will include improvements throughout the vehicle. Its new UX 2.0 software will also feature panel displays, an instant-on glass cockpit, and other features.
Lucid’s Air sedan is already the longest-range EV on the market. Moreover, its production numbers are improving. It is also ahead of Tesla in some areas.
The company’s pricing power is strong. Its electric models have priced 15% to 20% above ICE (internal combustion engine) cohorts. This means the company can cater to a less-sensitive consumer segment.