Lucid, an electric vehicle manufacturer specializing in luxury models, has experienced a challenging period, with its stock value dropping dramatically over the past year. This decline is largely attributed to lower-than-anticipated vehicle deliveries and considerable financial losses. The company, which entered the public market through a SPAC merger in 2021, is now at a crossroads, prompting investors to question its potential for recovery in the near future.
Initially, Lucid garnered significant attention, partly due to its leadership by Peter Rawlinson, a former chief vehicle engineer at Tesla, renowned for his work on the Model S. However, like many other EV ventures that emerged via SPACs, Lucid's initial projections proved overly optimistic. The company significantly underperformed its delivery targets, struggling with numerous hurdles including supply chain disruptions, intense market competition, and broader economic pressures such as inflation and rising interest rates, which impacted the overall EV market. Furthermore, Rawlinson's departure in early 2025 left a void in the CEO position, adding to the company's uncertainties.
Despite these challenges, there remains a glimmer of hope for Lucid, largely fueled by the strong backing of the Saudi Arabian government, which holds a controlling stake through its Public Investment Fund. This strategic support is expected to be crucial in scaling up Lucid's operations. The company also recently began deliveries of its second vehicle, the Gravity SUV, towards the end of 2024. Additionally, a partnership with Uber and Nuro aims to deploy a substantial number of autonomous Gravity SUVs across the U.S. over the next six years, alongside fulfilling a long-term order for 100,000 vehicles from the Saudi Arabian government, initiated in 2022.
Looking ahead, Lucid plans to introduce a more budget-friendly "Earth" SUV in late 2026 or early 2027. This move is intended to enhance its competitive standing against established players like Tesla and other EV producers. To support these expansion plans, the company is set to upgrade its manufacturing facilities, AMP-1 in Arizona and AMP-2 in Saudi Arabia. Analysts are forecasting a substantial increase in Lucid's revenue from 2025 to 2027, projecting a more than threefold rise as it boosts production of its Air sedans, ramps up Gravity SUV output, and launches the Earth SUV. These developments are also expected to gradually mitigate its financial losses.
With a current market capitalization of $3.3 billion, Lucid's stock appears undervalued, trading at a mere 1.4 times its projected sales for the year, especially when compared to Tesla's 15.2 times. A significant short interest in Lucid's stock, with 43% of its float being shorted as of January 30, suggests the potential for a substantial short squeeze if positive news emerges. While the stock remains highly speculative, a steady increase in production without major setbacks could lead to a rebound in its value over the next year.