Lucid Stock Has Lost Its Luster After It Cut Its Production Goals

Stocks to sell

Lucid Group (NASDAQ:LCID) stock hasn’t had a great week. The company recently released its second-quarter 2022 financial and operational results and investors weren’t thrilled.

Lucid CEO Peter Rawlinson openly acknowledged issues related to logistics and supply chains. s a result of these challenges, Lucid has slashed its vehicle production goal in half. Traders started bailing and more share-price downside may be coming.

One production outlook cut might be thought of as an isolated incident. Two consecutive quarters of vehicle production target cuts, however, may be the start of a trend. Is Lucid able to handle the macroeconomic challenges that electric vehicle (EV) makers are facing in 2022?

It’s a valid question and investors have every right to be concerned about Lucid Group’s ability to deliver, literally and figuratively. Besides, the company’s quarterly revenue miss indicates that Lucid’s financial position is less than ideal.

LCID Lucid Group $17.24

What’s Happening with LCID Stock?

Frankly, the price action of LCID stock in 2022 so far has been frustrating. After ramping up to $45 for a great start to the year, the Lucid share price sank to the $18 area in May and has been stuck there for months on end.

It’s also frustrating that Lucid Group is difficult to properly assign a value to. That’s because Lucid has no price-to-earnings (or P/E) ratio since the company isn’t profitable.

The buyers might argue that EV startups should be forgiven for being unprofitable. After all, vehicle electrification is all about the future, not the present, right? Maybe, but Lucid’s investors can certainly expect revenue growth and ambitious vehicle delivery targets.

Did Lucid Group “deliver” in these areas during 2022’s second quarter? The answer is, Q2 was a “good news, bad news” type of situation, with a heavy emphasis on the bad news, unfortunately.

Lucid Chopped Its Production Volume Outlook in Half

Let’s start off with the good news. It appears that Lucid Group narrowed its quarterly net earnings loss, from $1.17 per share during 2021’s second quarter to 33 cents per share in Q2 2022. That’s progress, but it still would be nice to see Lucid finally turn a profit one of these days.

Then there are the top-line results, which might disappoint Lucid Group’s investors. While Wall Street had braced for $145 million in Q2 2022 revenue, Lucid’s actual result was just $97.3 million.

Perhaps the most disappointing part of the fiscal release, however, was Lucid Group’s revision of its full-year 2022 production volume guidance. The company lowered this forecast to a range of 6,000 to 7,000 vehicles, after having predicted full-year production of 12,000 to 14,000 vehicles in May.

Rawlinson cited “the extraordinary supply chain and logistics challenges we encountered” in defense of Lucid Group’s chopped production outlook. That’s understandable, but it’s still going to be difficult for Lucid to generate strong revenues in the long run when fewer cars are being produced.

What You Can Do Now

It’s great to see that Lucid Group is narrowing its profitability gap. Still, the drastically reduced full-year vehicle production guidance is troublesome.

Lucid’s quarterly revenue miss is a bad sign, as well. All in all, the negatives seem to outweigh the positives with Lucid Group now, so it’s perfectly fine to just avoid LCID stock.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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