Needham analyst Chris Pierce is "quite enthusiastic" about Lucid Group Inc.'s recently teased Gravity sport utility vehicle, but he isn't sure that excitement will translate to stock gains.
Pierce downgraded Lucid shares (LCID) to hold from buy Monday, writing that he doesn't have enough confidence in the near-term demand for the electric-vehicle company's offerings.
Lucid shares fell 4.33% in morning trading.
Production of the Gravity SUV won't begin until late 2024, and Pierce was doubtful that investors would put much faith in reservation metrics if Lucid were to share them. That's because "reservations for the [Lucid] Air Sedan didn't materialize into vehicle orders at hoped-for rates, ultimately making the Gravity SUV a show-me story in a show-me stock, with minimal concrete proof points in the near term," he wrote.
Pierce also said he has concerns about Lucid's ability to strike a meaningful licensing deal with a legacy automaker, given that Aston Martin is paying Lucid $457 million to integrate the company's technology into its ultimate EV plans. By his rough math, Aston Martin could be paying Lucid $20,000 to $30,000 per vehicle, though he acknowledged that estimating the per-vehicle payout is challenging given minimum-spend requirements.
"While our initial math is likely far from exact, it does lower our confidence in [Lucid] striking a deal with a legacy [original equipment manufacturer] to license their EV technology given the dollars per vehicle Aston Martin is potentially paying," Pierce wrote.
There's "a low likelihood of a more mass market/higher absolute dollar value licensing announcement in the near term post taking a deeper look at the Aston Martin per vehicle economics," he continued.
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