Sign InLucid Group Inc. (LCID) Stock Analysis: Hold Recommendation Amidst Production Struggles
Summary
As of July 17, 2023, Lucid Group Inc. (LCID) closed at $7.03, up 4.93% from the previous close, with potential for moderate movement in the next trading day and both upward and downward corrections expected in the upcoming week, leading to a recommendation to hold LCID stock due to ongoing production struggles and negative EPS, but with potential undervaluation and strong backers.
Technical Analysis
As of July 17, 2023, Lucid Group Inc. (LCID), listed on NASDAQ, closed at $7.03, up 4.93% ($0.33) from the previous close. The intraday trading activity was encapsulated within a range of $6.6 (low) and $7.11 (high). Lucid Group's trading volume on the day stood at 1.46 million shares, significantly lower than the average volume of 38.89 million shares.
From a year-long perspective, the stock price has fluctuated between a low of $5.46 and a high of $21.78. As for the market capitalization, LCID stood at approximately $16.18 billion. Lucid Group currently has around 2.27 billion outstanding shares.
Delving into trend indicators, the 50 Day Moving Average (MA) was observed at $6.95, while the 200 Day MA registered at $9.02. The stock’s relative strength index (RSI14) is at 65, which is near to the overbought threshold of 70, suggesting the stock could be over-appreciated. The 3-month Moving Average Convergence Divergence (MACD) value was calculated at 0.24, warranting attention to the potential signals it may provide.
Fundamental Analysis
Lucid Group's Earnings Per Share (EPS) stands at -$1.48, indicative of a net loss, reflected in the stock's negative price to earnings (PE) ratio of -4.81. This could be a cause for concern as it suggests that Lucid Group is not currently profitable.
Analyzing more in-depth data, Lucid Group's discounted cash flow (DCF) value stands at $8.14, higher than the current stock price. This is a positive sign as it suggests the stock might be undervalued currently.
Looking at target estimates, they range between $12 and $36, with a median target of $18 and a consensus target of $20.2. Both the median and consensus targets are significantly higher than the current stock price, indicating potential growth expectation from analysts.
Key News Analysis
Recent news postulates varying pressure on Lucid Group’s performance. Specifically, production shortfalls have been highlighted, with the automaker only delivering 1,404 vehicles in Q2, below the consensus estimate of 1,818. This ongoing issue could present significant obstacles to achieving their objective of producing over 10,000 vehicles this year.
Despite operational struggles, it's worth noting that Lucid Group is backed by Saudi Arabia, indicating access to significant capital and potential for steadying the business.
Stock Prediction
For the next trading day, July 18, 2023, taking into consideration Lucid's current momentum, technical indicators, and the news, the stock price is expected to display moderate movement, pivoting around the last close of $7.03.
Looking ahead for the upcoming week, the probability exists for both upward and downward corrections based on current Bollinger bands and given the macroeconomic conditions, production challenges, and recent earnings news.
Final Evaluation
Despite ongoing production struggles and a negative EPS, the presence of strong backers and the potential undervaluation reflected in the DCF analysis could be compelling factors for potential investors.
Given the disproportionate distribution of risk and reward, lack of consistency in terms of stock movement, and considering the rising competition in EV space, the recommendation for LCID stock stands at Hold. Investors already in position might want to maintain status quo while potential new investors are encouraged to observe future earnings, company announcements, and market trends closely before making an investment decision.
