The electric vehicle sector has recently experienced several problems. Besides inflationary pressures and supply chain constraints, the growing tension between Russia and Ukraine has led to an increase in raw material prices, which has increased costs for EV manufacturers. However, Lucid stock seems to offer more rewards than risks.
Faced with so many problems, it would be normal for electric vehicle manufacturing companies to have poor performance and negative numbers. However, this is not the case for US manufacturer Lucid Group.
Lucid is not known for being an ordinary electric vehicle manufacturer. The company has a disruptive vision for the automotive industry. Lucid shareholders must be willing to accept some risk and volatility in the face of a global vision that this company possesses.
The industry’s problems have affected Lucid in part, and that is why its production could be affected. It has maintained its production volume outlook of 12,000 to 14,000 vehicles for the year because of logistical issues, and because of factory closures in China due to Covid.
The company announced revised prices for most of its models starting June 1, 2022, because of the setbacks. However, prices will remain the same for existing reservations and for new reservations made until May 31, 2022.
The US company filed a financial press release that not only presents a new pricing model for Lucid’s EV model lineup, but also some some revealing financial results. It posted a lower-than-expected loss in the first quarter of 2022, and revenue exceeded analysts’ expectations. Lucid posted a loss of $0.05 per share versus its loss estimate of $0.30 per share.
In addition, quarterly revenue of $57.7 million beat the consensus estimate of $53.43 million. The numbers are favorable when compared to revenues of $0.3 million in the prior year’s first quarter. Customer bookings rose to more than 30,000, reflecting a significant sales potential of $2.9 billion.
The Saudi Arabian government signed an agreement with Lucid to purchase up to 100,000 electric vehicles over the next 10 years. This will increase the prestige of the U.S. company to be recognized as one of the world’s best manufacturers of luxury electric vehicles.
Lucid’s CEO, Peter Rawlinson, stated that the company is focused and excited about the product roadmap for 2022. Given this news, Wall Street is bullish on the company’s value. Lucid’s average price target of $40.50 implies an upside potential of 113.4% from current levels. TipRanks data shows that financial bloggers’ views are 80% positive on Lucid, compared to an industry average of 68%.
Surely electric vehicles are the future of the auto industry because of their rapid technological improvements and expanding charging infrastructure. The higher prices of Lucid vehicles in the US should be quickly accepted by customers due to the impact of dollar inflation.
Added to that, the company’s inclusion with its electric vehicles in Saudi Arabia would bring a new source of revenue for Lucid. So, the problems within the sector can be countered and the benefits can outweigh the risks with Lucid stock.
Does it seem like a good time to invest in Lucid stock? Do you think electric vehicles will be the future of the industry?
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