Lucid Group stock plunged to $2: Could LCID crash to $1?

Lucid Group stock price tumbled to a record low last week as investors remained concerned about Donald Trump’s threat to end tax credits for electric vehicles. LCID shares plunged to a low of $1.93 on Friday, bringing the year-to-date losses to 52%. This crash makes it one of the worst-performing companies in Wall Street this year. 

Lucid Group cash burn is continuing

Lucid Group share price has been in a steep sell-off as the cash burn accelerated and its revenue growth slowed. 

Results released recently showed that Lucid’s revenue came in at $200 million in the second quarter, an increase from $137 million in the same period last year. Its nine-month revenue rose to $573 million.

At the same time, its quarterly loss rose to $990 million in the last quarter and to $2.4 billion in the first nine months of the year. The company made a net loss of $630 million and $2.17 billion in the same period. 

Lucid Group’s cash burn is expected to continue this year, with its net loss per share coming in at $1.16. 

On the positive side, Lucid Group’s deliveries are increasing, hitting a record high in the third quarter. The company is also making progress to reduce costs, especially now that it has started deliveries for its Gravity SUV. Earlier this year, it slashed 400 jobs or 6% of its workforce after raising $1 billion to boost its balance sheet.

Trump’s tax credit

The other positive factor is that the company has said that it will be immune if Donald Trump nixes the EV tax credit, one of the top reasons the stock has tumbled. 

In a statement, the CEO Peter Rawlinson, said that its vehicles are not eligible for the tax credit because they are more expensive, with the base sedan starting at $69,900. 

We believe that Trump will not nix the tax credit, which is supported by most automakers. Additionally, Trump has become a close associate with Elon Musk, the CEO of Tesla, a company that has benefited from these credits. 

The other potential catalyst for the Lucid stock is its Gravity SUV, which starts at $79,900, with the Gravity Grand Touring going for $94,900. These vehicles have over 440 miles of range, making them more ideal than competitors. 

Therefore, there is a likelihood that many wealthy environment-conscious customers will opt for the vehicles. 

Additionally, analysts believe that Lucid Group’s growth will accelerate. The average revenue estimate for the year is $768 million, a 29% increase from what it made last year. This revenue figure will be followed by $1.75 billion in 2023.

The challenge, however, is that Lucid will continue burning cash and diluting its shareholders. Over time, its outstanding shares have risen from 207 million in 2021 to 2.38 billion today. 

Read more: Despite Lucid’s stock plunge, here’s why I see a bright future for the company

Lucid Group stock price analysis

The daily chart shows that the LCID share price has been in a strong sell-off in the past few months. It dropped below the important support level at $2.81, its lowest level on August 5, and the neckline of the double-top pattern at $4.33. 

Lucid has also dropped below the key support at $2.30, its lowest point on April 23rd. It has also remained below the 50-day and 100-day moving averages. The Relative Strength Index (RSI) and the MACD indicators have all pointed downwards. 

Therefore, the path of the least resistance for the shares is downwards, with a potential for even hitting $1 in the near term. In the long term, however, Lucid Group share price will bounce back as it reduces its net loss and grows its profits. 

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