What Happened?
Shares of luxury electric car manufacturer Lucid (NASDAQ:LCID) fell 13.8% in the afternoon session after Bank of America downgraded the stock's rating from Neutral to Sell and lowered the price target from $3 to $1 following its mixed Q4 2024 earnings.
The quarter itself was fine as the company exceeded analysts' expectations for vehicle deliveries, revenue, and EBITDA. Deliveries surged 79% year-on-year to 3,099 units, even as the company navigated an increasingly competitive EV market. Margins improved, though profitability remains elusive.
Looking ahead, Lucid set a 2025 production target of approximately 20,000 vehicles. However, the recent CEO transition introduces an element of uncertainty. Overall, the quarter highlighted better execution with rising deliveries and improved margins, though profitability remains a challenge.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lucid? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Lucid’s shares are extremely volatile and have had 54 moves greater than 5% over the last year. But moves this big are rare even for Lucid and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 19.5% on the news that the company announced an underwritten public offering of roughly 262 million shares of its common stock.
Separately, majority stockholder Ayar Third Investment Company, an affiliate of Saudi Arabia's Public Investment Fund, agreed to buy 375 million shares of common stock from Lucid in a private placement. Following the deal, Ayar is expected to maintain approximately 58.8% ownership of Lucid's common stock.
Overall, Lucid is expected to raise gross proceeds of $1.67 billion from the offerings. The offering is likely to have a negative impact on its stock price as the newly issued shares dilute the ownership of existing shareholders. Separately, the company provided preliminary operating loss guidance of $765 million and $790 million for the third quarter, below analysts' expectations.
Lucid is down 25.6% since the beginning of the year, and at $2.26 per share, it is trading 47.1% below its 52-week high of $4.26 from August 2024. Investors who bought $1,000 worth of Lucid’s shares at the IPO in September 2020 would now be looking at an investment worth $228.01.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
