As a stock, Lucid Group (NASDAQ:LCID) may be running on low battery. Market volatility has hammered LCID stock. It’s back down to the mid-teens per share. But as a company, it’s continuing to drive ahead, making progress with partnerships and vehicle order deals.
More recently, the early-stage electric vehicle (EV) maker has made another bit of progress. That would be the launch of its financial services arm. Granted, this isn’t a major game changer. This is, however, a positive development.
It will help ease the challenge of going from delivering thousands of vehicles per year to hundreds of thousands of vehicles per year. While it may take time for the stock to take off again, as it keeps moving ahead, EV bulls should keep an eye on it.
|LCID||Lucid Group, Inc.||$15.78|
Lucid Financial Services Launch
On Jun. 7, Lucid Group announced the launch of Lucid Financial Services. With Bank of America (NYSE:BAC) as its financing partner, this platform will enable buyers to choose between several loan and lease products for the company’s vehicles.
This is an important step toward making this company a major EV brand. Incumbent automakers have their own financing divisions. Tesla (NASDAQ:TSLA) doesn’t underwrite loans and leases for its vehicles. It does, though, help connect buyers with third-party financing.
Providing a seamless process for financing the purchase of one of its vehicles increases the chances that Lucid is able to gin up demand that matches up with its ramping up of production. Having said all this, while positive in the long-term, this news isn’t doing much in the near term.
That’s evident from the recent stock performance. Even worse, this could continue. It all depends on how long it takes the market to absorb external factors like rising interest rates, high inflation, and the increasing odds of a recession. Added onto this are other near term challenges.
Still a Worthy EV Contender, Despite The Hiccups
As mentioned above, the latest round of market volatility has put pressure on LCID stock. Shares haven’t re-hit their 52-week low that was set in May, but they have seen a double-digit drop since late last month, when the stock made a short-lived partial recovery.
Alongside volatility, hiccups on the company level also continue to affect its stock price performance. You may recall how, back in February, Lucid walked back its 2022 production target, citing the supply chain crisis. Even now, investors remain doubtful the company can deliver growth that’s in line with expectations.
This is especially true as uncertainties over inflation, interest rates, and a possible recession are in the air. These uncertainties, if they intensify, will not only continue to have an impact on Lucid’s stock price. A more challenging economic environment may affect demand for its flagship vehicle, the Air luxury sedan.
Yet, while it’s facing a less favorable stock market and less favorable market conditions, that doesn’t mean things will not swing back. It has plenty to lean on during today’s challenges. Once said challenges clear up, It will be well-positioned to continue reaching its ambitious goals.
Bottom Line on LCID Stock
Currently, Lucid stock earns a “B” rating in my Portfolio Grader. Temporary negatives could keep outweighing long-term positives, such as the launch of its financial services platform, in the months ahead.
Fortunately, it has plenty on its side to help it ride out current troubles. Per its latest financials, it has nearly $5.4 billion in cash on hand. It has also locked down a large vehicle order from one of its financial backers, the government of Saudi Arabia.
Compare that to some other EV startups. They are not only contending with industry challenges, but are also facing the added challenge of not being on the proper financing footing. On top of this, with its price drop in 2022, this stock has fallen to an appealing entry point for a long-term position.
If you’re bullish on the future of EVs, LCID stock remains one of the strongest contenders out there.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.