Lucid Shares Rise After Morgan Stanley Upgrade, But Long-Term Challenges Persist

GuruFocus.com03-21

Lucid Group (LCID, Financials) shares rose 3.7% to $2.36 as of 11:18 a.m. ET on Friday after Morgan Stanley upgraded the stock from Sell to Hold, according to the firm's latest equity research.

  • Warning! GuruFocus has detected 4 Warning Signs with LCID.

Previously bearish about the business, Morgan Stanley analyst Adam Jonas changed his opinion to become more neutral. According to him, Lucid presently offers a "balanced risk/reward" arrangement and would gain from following the investing theme of embodied artificial intelligence of the company. Among global changes in supply chains and geopolitics, Jonas also cited Lucid's local manufacturing approach and close relationships to Saudi Arabia as benefits.With a third-quarter operating loss range ranging from $765 million to $790 millionworse than expert expectationsthe corporation has been posting continuous severe losses.Through its subsidiary, Ayar Third Investment Company, Lucid's biggest stakeholder still is Saudi Arabia's Public Investment Fund. Ayar just paid $1.67 billion for 375 million shares, therefore increasing its ownership to about 58.8%.Lucid still faces pressure from competitive electric car markets and growing financial losses even if the Morgan Stanley upgrade offers a temporary boost. Market players are intently watching to see whether Lucid may use artificial intelligence technologies or strengthen strategic alliances to turn around its course.

This article first appeared on GuruFocus.
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