To The Moon

$Lucid Group Inc(LCID)$ is scheduled to release their second-quarter earnings results on 05 August 2024 after the market close.

LCID had fell 3.06% on last Friday (02 Aug) and market is expecting a quarterly EPS of -$0.27 along with a revenue of $192.65M (+27.7% Y/Y).

For the second quarter, Lucid produced 2,110 vehicles and delivered 2,394 vehicles. This compares with the production of 2,173 units and delivery of 1,404 units last year.

The EV space has witnessed a cooling demand amid higher borrowing costs, leading to a price war among manufacturers aiming to increase the appeal of their products.

"Despite a positive product lineup and potential growth with the Gravity SUV model, Lucid Group's high cash burn rate and valuation pose risks," said Investing Group Leader Jonathan Weber.

In May, Lucid announced a restructuring plan, under which about 6% of its workforce, about 400 jobs, was let go. The company said that would recognize a Q2 charge of about $19 million to $23 million and see total restructuring charges of about $21 million to $25 million.

During the previous quarterly earnings, Lucid missed both profit and revenue estimates, even as the company delivered 39.9% more cars in Q1 year-over-year.

Lucid (LCID) Might Get Hit Hardest With Recession Worries

With Lucid announcing their production and delivery totals for the quarter ended 30 June 30, Lucid produced 2,110 vehicles and delivered 2,394 vehicles during this period.

We have seen Lucid react with more than 8% down when the new economic data raised fears of a recession on last Tuesday (30 july). This show that recession would prove to hit electric vehicles hard, especially when the cash flow and liquidity is smaller for smaller manufacturer.

If the economic data continue with no Fed rate cut in sight sooner, Lucid could be moving into cash flow issue, and can they continue their production?

Lucid (LCID) Price Target Forecast

Based on 9 Wall Street analysts offering 12 month price targets for Lucid Group in the last 3 months. The average price target is $3.01 with a high forecast of $4.00 and a low forecast of $1.00. The average price target represents a -3.53% change from the last price of $3.12.

If we looked at how Lucid has come up with the restructuring plan in May, with the recession worries, there might be a need for Lucid to reduce their expenses, this would greatly affect their cash flow, and I believe their cash burn rate would increase.

I am expecting Lucid to drop to near $1.80 before its quarterly earnings, unless we could see some catalyst bringing the market up.

Lucid (LCID) Year-To-Date Returns A Warning Sign

The more than 25% negative returns to LCID stock price would get worse as the EV space would face more demand reduction, as consumer spending on discretionary would reduce.

The price war would become secondary, but LCID cash burn rate need to be controlled urgently, as market wait for the rate cut, else LCID might have problem to raise capital to stay afloat.

Technical (MACD and KDJ) - Significant Downside Trend

If we looked at the MACD and KDJ, Lucid is heading down for a downside trend, so I am expecting more selling on LCID. There have been already cash burn concern, now that economic data is signalling that consumer spending might reduce further.

So the demand for LCID vehicles should be going down and this should also make LCID share price go further down.

Summary

If we looked at the economic data released last week, the most hit sector is consumer discretionary losing -4.61%, EV space should be hit the hardest.

I am expecting the consumer discretionary sector to be hit hardest this week.

Appreciate if you could share your thoughts in the comment section whether you think Lucid would be hit hardest with the recession worries?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.