Clear (NASDAQ:LCID) The stock fell to a new low in Thursday’s trading. The company’s stock price closed the daily session down 4.7% and fell as much as 8.3%, according to data from S&P Global Market Intelligence.
Lucid stock fell on news that Tesla had cut the price of its Model Y by 5,000 euros (about $5,430) in Germany and cut prices by similar amounts in France, Norway and the Netherlands. The price cut follows significant price cuts for the Model 3 and Model Y electric vehicle flagships last week.
Tesla’s aggressive price cutting highlights weak demand in the electric vehicle market and likely signals that other players in the space will face significant headwinds. A decline in demand for electric vehicles could be particularly damaging for Lucid, but the stock price has never been cheaper.
Is Lucid stock a buy now?
Lucid is a young player in the electric vehicle space and went public through a merger with a special purpose acquisition company (SPAC) in July 2021. After today’s decline, the company’s stock price is now down roughly 95% from its high.
Even after the dramatic decline in valuation, the company is still valued at about 4.6 times this year’s expected sales. More importantly, the company is still far from turning profitable even assuming an optimistic trajectory for the business.
In the third quarter of 2023, the company recorded revenues of $137.8 million from the delivery of 1,457 vehicles. The company ended the third quarter with cash, cash equivalents and short-term investments totaling about $4.4 billion, but it is burning cash at a rapid rate. Lucid reported a net loss of about $752.9 million in the period.
The company’s long-term viability depends on significantly increasing car production and sales, and maintaining strong pricing power in the ultra-luxury car market. With Tesla once again reducing the prices of its cars and leading automakers including General Motors And stronghold By scaling back its planned electric vehicle production, it appears that Lucid will have to contend with a weaker demand environment in the near term.
Despite trading down significantly from its high, Lucid stock remains extremely risky. If the company can overcome looming challenges and move closer to profitability, its stock will likely achieve massive gains above current pricing levels. But investors should understand that the company faces tough prospects, and that its already struggling shares could fall further.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and recommends the following options: Long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
Lucid Stock Hit a Record Low Today – Will the Stock Be a Buy for 2024? Originally published by The Motley Fool