Lucid Motors (NASDAQ:LCID) stock fell after lowering production guidance for its electric cars, cutting prices, and reducing pre-order figures.
In response, Bank of America on the stock.
Lucid was a star of January’s market rally, doubling in price. Since then, it has lost half of those gains. Lucid came public at about $25 per share in late 2021. It was due to open on Feb. 23 at about $8.60 per share.
Royal Patronage
Optimism reigned over Lucid because it is backed by the Saudi government, which means it should have adequate capital to scale production. The company’s Lucid Air luxury sedan also .
But the fourth quarter numbers, with , fell short of estimates.
Lucid said on Feb. 22 that it would deliver just 10,000-14,000 cars this year due to . It had been estimating deliveries of . Lucid ended 2022 with $4.9 billion in total liquidity but is losing $938 million of cash flow each quarter.
The Saudis have been backing Lucid on its promise to build a factory in the desert kingdom. Right now, all its facilities are in Arizona. The supply chain issues slowing production and raising costs might be worse in the Middle East than in the U.S., where battery production is rapidly increasing.
Traders at Stocktwits were of Lucid. After listening to CEO Peter Rawlinson’s earnings call
managing partner for the Future Fund, .
Becoming a car company isn’t as easy as designing and building a car. Scaling production is the goal. When Tesla (NASDAQ:TSLA) faced the scaling problem in 2018, CEO Elon Musk famously to manage the ramp-up.
LCID Stock: What Happens Next?
There is said to be a floor under Lucid stock, namely the price the Saudis would pay to take over the company. But that floor may disappear unless Lucid can figure out production scaling and managing its supply chain.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
