To The Moon

$Lucid Group Inc(LCID)$

Lucid, the electric vehicle company, has seen its shares drop by 28% so far in 2025. If you watched my video at the start of the year, I advised against buying Lucid stock in 2025. But now that it’s already down 28%, does that make it a good buying opportunity? I’ll answer that in this video by evaluating the company’s recent performance, its prospects with the Lucid Gravity SUV that just launched, its cash flow, and its valuation to see if it’s time to invest in Lucid stock.

From a consumer standpoint, I’m a fan of Lucid. It’s my favorite electric vehicle because of its stunning designs. When I see a Lucid on the road, it looks beautiful—by far my favorite electric car in terms of aesthetics. However, as much as I admire the vehicle, the business has struggled. As I mentioned earlier, Lucid’s stock is down 28% in 2025. Zooming out a bit, it's down 27% over the past year, 90% over the last three years, and 78% over five years. No matter the timeframe, Lucid’s stock performance has been poor. In fact, very few EV stocks have performed well, except Tesla, but Tesla’s price increase is more about investor perception than the company's actual performance.

Earning Overview

​In the fourth quarter of 2024, Lucid Group, Inc. (NASDAQ: LCID) reported significant production and delivery figures. The company produced 3,386 vehicles and delivered 3,099 during this period. For the full year of 2024, Lucid produced 9,029 vehicles and delivered 10,241, marking a 79% increase in Q4 deliveries compared to Q4 2023, and a 71% rise in annual deliveries compared to 2023.

Financially, Lucid achieved a Q4 revenue of $234.5 million, contributing to an annual revenue of $807.8 million. The company ended the quarter with approximately $6.13 billion in total liquidity. However, the quarter was also marked by significant leadership changes. CEO Peter Rawlinson unexpectedly resigned, transitioning to the role of Strategic Technical Advisor to the Chairman of the Board. Marc Winterhoff, the current COO, was appointed as interim CEO.

Fundamental Analysis

On a positive note, Lucid’s revenue growth has been accelerating. While other EV companies like Tesla and Rivian are seeing flat or declining year-over-year growth, Lucid’s sales are increasing. The company reported a 49% revenue increase last quarter, up from just 12% a year ago. Even better news for investors is the recent launch of the Gravity SUV, which adds a new product category to their lineup. Previously, Lucid was only selling sedans, but now they have an SUV in the mix, and SUVs are more in demand globally than sedans. Last year, Lucid delivered about 10,000 vehicles, and this year, they’re expecting to sell 20,000—a near doubling of deliveries. The Gravity SUV starts around $90,000, with a slightly lower-priced version around $80,000.

Lucid’s focus has been on the luxury end of the market with premium vehicles, and they’re hoping to release a more affordable model by 2026. In the short term, they’re focusing on higher-end customers, hoping to eventually expand to a broader market.

To sum up, while I admire Lucid from a consumer standpoint, the company needs to improve its financials and sustainability before it can become a viable long-term investment.

Lucid needs to either increase unit sales, release a lower-priced model, sell off part of their manufacturing capabilities, or license more of their technology (as they've done with Aston Martin) to make the business more sustainable. Right now, they're far from that point. Even if they hit their target of 20,000 unit deliveries by the end of the year, it won't be enough to put the company on solid ground. They need to reach a broader customer base to put the business in a better position.

With the stock price falling significantly and sales numbers on the rise, the forward price-to-sales ratio is now at its lowest in three years, sitting at 2.3. I know many investors are wondering if now is the time to buy Lucid stock at these much lower valuations. Unfortunately, my answer is still no. I don’t believe the business is investable under the current circumstances.

Guidance

Lucid's guidance for 2025 includes a projection of delivering around 20,000 vehicles for the year, which represents a significant increase from their 2024 deliveries of 10,241 vehicles. This growth is largely driven by the launch of the Lucid Gravity SUV and continued demand for their luxury sedans.

In addition to production and delivery targets, Lucid also plans to continue focusing on expanding its vehicle lineup, with an eye on introducing more affordable models in the future (around 2026 or later). However, the company remains cautious about its financial outlook, with significant ongoing losses. Despite the projected increase in deliveries, Lucid has not yet forecasted profitability, and investors are closely watching the company's ability to reduce cash flow losses and reach a sustainable operational model.

Lucid's guidance for 2025 includes:

• A target of 20,000 vehicle deliveries for the year.

• Continued emphasis on its premium vehicle segment, with hopes to eventually introduce lower-priced models to broaden their customer base.

• Maintaining a focus on achieving operational sustainability and reducing significant losses, particularly in terms of cash flow and gross profit.

The company’s long-term strategy will depend on the success of its new models and its ability to improve its financial standing, which is a critical factor for investors evaluating the stock.

Some people mention that Lucid has strong backing from the Saudi Arabian government, which has helped fund the company and agreed to buy up to 50,000 vehicles over the next few years. While this support is crucial, it can only go so far. The Saudi investment will only last as long as the company can prove it has a sustainable future. If it doesn’t, the funding will eventually stop, and Lucid will need to find a different path forward.

Free Cash Flow

As for cash flow, Lucid has improved its operations over the past five years. While they’ve been losing money until 2023, they’ve started to reduce those losses. However, they are still deep in the red, with a negative $2 billion cash flow for the trailing 12-month period. Even if they double their sales in 2025, they’ll still likely lose a significant amount of money, possibly close to $2 billion, and they’re losing money on every car sold. The business is unsustainable at this pace, and Lucid needs to significantly increase its sales to move toward profitability. You can't run a business that’s consistently losing $2 billion a year in cash flow.

Risks and Challenges

Financial Sustainability

Ongoing Losses: Lucid has consistently reported losses, with a negative cash flow from operations. Despite some improvements, the company is still far from reaching profitability. The significant amount of cash they are burning each year raises questions about their long-term viability unless they can rapidly scale sales or reduce expenses.

Reliance on External Funding: While Lucid benefits from backing by the Saudi Arabian government, which has funded the company and committed to buying vehicles, this funding can only go so far. If the company cannot achieve profitability or sustainability, the continued injection of funds could dry up, leaving Lucid in a precarious position.

Competition in the EV Market

Increasing Competition: Lucid faces fierce competition from established EV manufacturers like Tesla, as well as new entrants like Rivian, Fisker, and traditional automakers transitioning to electric vehicles. Competing with Tesla’s brand recognition, established infrastructure, and relatively lower-cost models is particularly challenging.

Price Sensitivity: Lucid’s focus on luxury electric vehicles positions it in the higher price segment, which can limit its customer base. While the company has plans to release lower-priced models in the future, this strategy may take years to materialize and faces challenges in scaling production to meet a broader market demand.

Production and Delivery Challenges

Scaling Production: Lucid's ability to scale production effectively is crucial for its growth. The company has set ambitious goals, including delivering 20,000 vehicles in 2025, but they will need to overcome manufacturing challenges to meet these targets. Any delays or production bottlenecks could hurt their growth prospects.

Supply Chain Issues: Like many other automakers, Lucid is exposed to global supply chain disruptions. Delays in key components, such as semiconductor chips or battery cells, could further affect production timelines and costs.

Profitability and Cost Management

Gross Profit Losses: Lucid is currently losing money on every car sold. Without substantial improvements in its cost structure or an increase in vehicle pricing, Lucid’s business model is unsustainable in the long term. Managing costs while scaling up production will be a critical challenge.

High Operating Costs: Operating a luxury vehicle business involves high fixed costs for R&D, manufacturing, and marketing. If Lucid cannot generate higher revenue through increased sales, it could continue facing massive losses.

Valuation

If the company shows significant progress this year—hitting that 20,000-unit target (which is the absolute minimum), offering details on their lower-priced model strategy, and giving clarity on when those models will come out, how many they plan to produce, and at what price point—then I might reconsider. Additionally, we need to understand when the company expects to break even in terms of free cash flow or cash flow from operations. Will we see a path to that by the end of the year? If so, and if there's a clear plan for achieving sustainability, I would then consider this stock closer to a "buy."

Market sentiment

Investor Sentiment: Lucid’s stock has seen significant volatility and steep declines in value over the past few years. While the stock is currently trading at relatively low valuations, investor confidence is fragile. The market remains cautious, and the company needs to prove its ability to generate consistent growth and profits to sway investors.

Stock Price Volatility: Lucid's stock has been highly volatile, partly due to its speculative nature as an emerging EV company. While some investors are hopeful about the company’s future, others remain wary due to the risks surrounding profitability and long-term sustainability.

The market sentiment around Lucid's stock is generally mixed, with a lot of caution among investors. On one hand, Lucid has been praised for its innovative and high-quality electric vehicles, particularly the design and performance of its luxury sedans and SUVs like the Gravity model. This has generated positive consumer sentiment, especially from those who appreciate the brand's aesthetics and its place in the luxury EV market.

However, the company's financial struggles have dampened investor enthusiasm. Lucid has been unable to achieve profitability, with substantial losses reported in recent years, including negative cash flow from operations. The company is still in the growth phase, but the market is concerned about its ability to scale effectively and sustain operations without continually burning cash. Despite its growth in revenue and the potential for the Gravity SUV to drive sales, the stock is facing skepticism about Lucid's long-term viability, particularly given its reliance on significant backing from the Saudi Arabian government.

In 2025, Lucid’s stock has dropped 28%, and over the past few years, it has seen dramatic declines—down 90% over three years and 78% over five years. The stock is currently trading at relatively low valuations, with a forward price-to-sales ratio of 2.3, which could make it seem attractive to some investors looking for a bargain. However, many are hesitant to buy, given the company's ongoing challenges and lack of clear progress toward profitability.

Conclusion

Overall, the sentiment is cautious and somewhat negative, with many investors waiting for clear signs of financial stability and growth before committing to Lucid stock. While there's some optimism about the potential of new models like the Gravity SUV, investors are waiting to see if Lucid can deliver on its promises and scale its operations in a sustainable way.

But for now, I don’t see Lucid as an investable company. It’s unfortunate because I really hope the company succeeds. I want to see more Lucid cars on the road. If I were in the market for an electric vehicle, Lucid would certainly be one of my top choices—but not at these price points.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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