Saturday, August 2, 2025

Latest

Lucid Group Stock Soars on News That Is Really Not Additive to the Story

Investors in Lucid Group, Inc. (NASDAQ: LCID) stock seem to continue to emphasize hope over that of an evenhanded assessment of opportunities and risks. On October 25, Lucid shares rose 11.4% on two pieces of news: a company Tweet on October 24 showing a car trailer carrying six covered Lucid Air models; and the rental car company Hertz’s October 25 announcement that it planned to order 100,000 Tesla models by the end of 2022. 

Neither is, in our judgment, particularly material for Lucid.

First, in a September 28 press release, Lucid announced that it will begin delivering Lucid Air Dream Edition models in late October. So, the non-captioned car carrier picture issued by Lucid should not have been considered “news.” Indeed, the only development that would have been especially noteworthy would have been Lucid’s missing a self-imposed late October commencement delivery target issued less than a month ago.

Second, Hertz’s decision to order 100,000 Teslas over the next 14 months represents a further validation of the mainstream role that electric vehicles (EVs) play in the automotive sector. However, it is difficult to see how that news could be more than a tangential positive for Lucid. After all, Hertz ordered Tesla models, not Lucid models.

Lucid’s elevated valuation is the most problematic issue for investors. According to its own projections (which it has not updated in some time and could be subject to reductions), Lucid will not turn EBITDA positive or free cash flow positive until 2024 and 2025, respectively. 

By 2025 and 2026, the company hopes to realize gross margins of 22% – 23%. In 2026, the company hopes to generate US$2.9 billion of EBITDA and US$1.5 billion of free cash flow. So, even based on estimated 2026 EBITDA, Lucid’s current implied enterprise value-to-2026E EBITDA ratio is around 14x, a high figure for any growth company. Alphabet Inc. (NASDAQ: GOOG) trades at around a 20x enterprise value/EBITDA ratio based on current EBITDA.

Source: Lucid Group

As of September 30, 2021, Lucid’s short interest was 53.1 million shares, a high absolute number, which at first glance could suggest the possibility of a meme stock-like short squeeze. However, the 53.1 million shares shorted represents only about 3.3% of total shares outstanding of 1.62 billion, and just 1.0 times Lucid’s average daily trading volume. Several other start-up EV manufacturers have a larger proportional short interest, which in turn equates to a larger multiple of average daily trading volume.

On the other hand, unsubstantiated rumors on Twitter that the sovereign wealth fund of Saudi Arabia could increase its investment in Lucid would, if true, be a positive for Lucid. The fund’s current stake in the company is worth more than US$20 billion, almost all of which is profit. However, there has been no confirmation that the rumors are anything more than just that.

Lucid stock’s +11.4% reaction to the car carrier photo and to the Hertz-Tesla news seems far too aggressive. Indeed, that share price move boosted Lucid’s stock market value by US$4.4 billion. Most importantly, and factoring in this stock price move, Lucid’s enterprise value-to-2026E valuation continues to look quite stretched.

Lucid Group, Inc. last traded at US$27.30 on the NASDAQ.


Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

AngloGold Buys Another Gold Junior! Augusta Gold Acquired For $197 Million

Another Gold Deal! Aris Mining Sells Assets To McFarlane

Royal Gold Goes Big | $3.5 Billion Sandstorm Acquisition

Recommended

Tsunami Warnings Spread As Largest Quake Since 2011 Hits Russia

Northern Superior Intersects 1.75 g/t Gold Over 65.0 Metres At Philibert

Related News

Simply Obscene: Excessive Stock Based Compensation Largely Ignored By Investors

As investors have decided to place an enormous premium on growth stocks over the last...

Sunday, August 28, 2022, 09:00:00 AM

Lucid Completes US$1.5 Billion Equity Offering, Yet Valuation Still Looks Rich

On December 19, Lucid Group, Inc. (NASDAQ: LCID) revealed it had completed the US$1.515 billion...

Thursday, December 22, 2022, 07:29:00 AM

Lucid Group’s High Valuation Remains An Issue Despite Bullish Events

Lucid Group, Inc. (NASDAQ: LCID) stock has been a standout performer over the last few...

Saturday, September 25, 2021, 09:00:00 AM

Lucid Motors CEO Targets 577 Electric Cars For 2021, Won’t Commit To 20,000 Target For 2022

Lucid Motors (NYSE: CCIV) CEO Peter Rawlinson announced in a recent CNBC interview that the...

Wednesday, May 12, 2021, 09:54:00 AM

Start-Up EV Maker Rivian May Be Worth Significantly More Than Lucid Group

In light of the Lucid Group, Inc.’s (NASDAQ: LCID) share performance last week to news...

Wednesday, November 3, 2021, 03:36:00 PM