Shareholders in Lucid (NASDAQ:LCID) started 2021 on a bright note. And LCID stock kept up the momentum for most of the year.
LCID stock surged last November on news that the first Lucid Air EVs had been delivered to customers. Stellar reviews of Lucid’s first production EV also didn’t hurt. However, some of those gains were given back after the excitement was over and LCID remained relatively flat through this past December.
Starting in January 2022, LCID stock began to rally. By January 11, it closed at $45.47 for a 19.5% gain since the start of the year. Naturally, investors were thrilled.
They’re likely less impressed by its performance since. Currently sitting at around $35, LCID stock is down more than 20% from that January 11 close. In fact, it’s worth less than it was at the end of 2021.
Time to panic? I don’t think so. As I’ll attempt to explain, most of the factors that have been hurting Lucid stock aren’t about Lucid at all.
Market Concerns About Many Issues
Let’s start off with the very broad strokes.
Worry that Russia might invade Ukraine and kick off a war in Europe. Two years after the pandemic first began there is ongoing worry about Omicron’s continued death toll in the U.S and other countries. North Korea has begun firing off test missiles. The global shortage of semiconductors is expected to continue for the foreseeable future. In addition, inflation and interest rates are on the rise while crypto currencies have been tanking.
All of these big issues — none of which are specific to Lucid — have roiled the stock market in recent weeks.
On Monday, EV stocks in general took a big hit as a result of this uncertainty. LCID stock was down more than 6%, but virtually every EV stock was feeling the pain — even industry leader Tesla (NASDAQ:TSLA).
Telsa On Their Mind
Speaking of Tesla, the big dog (or is that doge?) EV maker is set to report Q4 and full year 2021 earnings after the bell on January 26.
It’s likely that LCID stock has felt the impact of speculation about what Tesla will report. Unfortunately, Lucid is in a bit of a “lose-lose” situation on this one. If Tesla reports big sales gains and issues guidance that points to further increases in 2022, there are naturally fears that some of those sales will come at the expense of Lucid. There are only so many people buying luxury EVs, after all.
On the other had, if Tesla reports that sales are slowing and/or the company issues lower than expected guidance for 2022, that is also a concern for LCID stock. Tesla is the dominant EV maker and serves as a bellwhether for the industry.
If Tesla sees sales of its EVs losing momentum in 2022, that could be because of competitors like Lucid. That’s a good thing, if you’re a Lucid shareholder. But a slowdown would more likely be seen as a weakness in EV sales in general. That’s not a good thing for Lucid.
Lucid Q4 Earnings
When Lucid reported Q3 earnings back in November, it was largely good news for investors. Lucid Air EV reservations were skyrocketing and 2022 production targets were still on track.
The company narrowed its losses to 43 cents per share from $6.64 per share the year before. It had $4.8 billion in cash. That third quarter earnings bump was part of the LCID stock surge last November.
Lucid is expected to deliver its Q4 and full-year 2021 results around the end of February. The market is going to be looking for strong sales numbers, good news on the production front, and an update on the forthcoming Lucid Gravity electric SUV.
Bottom Line on LCID Stock
In the past year, Lucid has gone from an EV startup to an EV automaker with cars in production and customer hands. That milestone alone is a big one. Its first EV is winning awards and seeing high demand, despite its luxury price tag.
The company needs to get its SUV models into production to meet the American market’s preferences, but at this point the future is looking bright for this EV maker.
LCID stock earns a “B” rating in Portfolio Grader, making it a pretty solid bet for long-term growth. Picking shares up at their lowest price so far in 2022 might not be a bad move. However, with the many outside forces disrupting the stock market — and Tesla always having an impact — there is potential that the current LCID dip gets worse before the stock rallies.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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