TLDR
- Lucid (LCID) stock jumped 5.2% Tuesday as Tesla’s market share dropped to an 8-year low
- Stifel adjusted price target to $21 from $2.10 following the company’s 1-for-10 reverse stock split
- Company reported Q2 loss of $739.3 million on revenue of $259.4 million
- Saudi Arabia’s Public Investment Fund continues backing through regular cash injections
- Stock remains down 9% over the past month despite Tuesday’s gains
Lucid Group stock climbed 5.2% Tuesday while broader markets posted modest gains. The S&P 500 rose 0.2% and the Nasdaq Composite gained 0.3%.
The electric vehicle maker’s rally may have been sparked by a Reuters report showing Tesla’s market share fell to its lowest point in nearly eight years. Competition in the EV space continues to intensify.
Despite Tuesday’s pop, Lucid shares remain down roughly 9% over the past month. The stock has struggled since completing its 1-for-10 reverse stock split in early September.
Stifel raised its price target on Lucid to $21 from $2.10 Monday while maintaining a Hold rating. The adjustment reflects the recent reverse stock split rather than improved fundamentals.
The reverse split became effective September 2, reducing outstanding shares from about 3.07 billion to roughly 307.3 million. This automatically increased the per-share price by a factor of 10.
Financial Performance Remains Challenging
Lucid reported a second quarter loss of approximately $739.3 million on revenue of $259.4 million. Large losses have been consistent throughout the company’s public trading history.
The EV maker would quickly burn through its cash position of about $1.8 billion without continued support. Saudi Arabia’s Public Investment Fund has provided regular financial backing.
The PIF owns a majority stake in Lucid and has made large cash injections in exchange for new shares. This arrangement provides necessary funding but creates dilution risks for other shareholders.
Market Position and Competition
Tesla’s weakening grip on the EV market could benefit competitors like Lucid. The luxury electric vehicle segment faces increasing competition from established automakers and new entrants.
Lucid Group recently announced a $300 million investment from Uber Technologies as part of their autonomous vehicle development program. These vehicles will be manufactured at Lucid’s Arizona facility.
The partnership with Uber represents a strategic move into the ride-hailing market. The vehicles will operate on Uber’s platform once development is complete.
Stock volatility remains high for Lucid as investors weigh growth potential against ongoing losses. The company continues working to scale production and reduce per-unit costs.
Cantor Fitzgerald adjusted its price target to $20 following the reverse split while maintaining a Neutral rating. Multiple analysts have updated targets to reflect the new share structure.
The reverse split was implemented to maintain stock exchange listing compliance and boost share price. Companies often use this tool when share prices fall too low.
Lucid’s authorized common shares decreased from 15 billion to 1.5 billion following the split. This change aligns with the reduced share count structure.
The company competes in the luxury EV segment with vehicles priced above mass-market offerings. Production scaling remains a key challenge for meeting delivery targets.
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