Lucid Group saw a sharp drop in its stock price during February, but it appears to have found some support at around $8 per share. Despite this, investors should think twice before buying the dip with LCID stock, as the company is not likely to make significant improvements in its operating performance anytime soon.
Although Lucid Group still has some advantages compared to other Inexperienced EV makers, it has lost much of its luster since going public via a special purpose acquisition company (SPAC) merger in 2021. The changing economic conditions and supply chain crisis have slowed the company's production progress, and it has burned through billions by year's end.
While some may hope for a comeback for the former young gun of the EV industry, it is not a wise move to invest in the company at this time. Despite its substantial backing from Saudi Arabia, the company is still struggling to scale up production, with plans to produce only between 10,000 and 14,000 vehicles this year after producing just 7,180 vehicles in 2022. Demand for the Lucid Air has also been decreasing since August, dropping from 37,000 to 28,000 reservations.
Therefore, investors should avoid going against the grain and betting on a LCID stock comeback. With production and demand falling short of expectations and the strong chance of heavy dilution, the potential future value of this onetime "Tesla killer" candidate continues to dwindle.
While it is true that Lucid Group has faced production and demand issues, and heavy dilution is a possibility, it is not necessarily a reason to completely avoid investing in the company. It is important to consider the potential future value of the company and its products, as well as any potential developments or partnerships that could have a positive impact on the company's performance.
Furthermore, it is possible that Lucid Group could address its production and demand issues in the future, and the company's substantial backing from Saudi Arabia provides some stability. As with any investment, there are risks involved, but it is not advisable to completely write off a company without considering all factors and potential outcomes.
Ultimately, investors should conduct their own research and seek advice from a financial advisor before making any investment decisions.