LCID Up 14% in One Day, Should You Buy The Stock?

We believe there are only a couple of things to fear in LCID stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $5.6 Bil in market cap, Lucid provides electric vehicles, EV powertrains, and battery systems, designing and engineering innovative transportation solutions with a network of twenty U.S. retail studios.

[1] Valuation Looks High

This table highlights how LCID is valued vs broader market. For more details see: LCID Valuation Ratios

[2] Growth Is Very Strong

• Lucid has seen its top line grow at an average rate of 114.2% over the last 3 years
• Its revenues have grown 39% from $668 Mil to $929 Mil in the last 12 months
• Also, its quarterly revenues grew 29.3% to $259 Mil in the most recent quarter from $201 Mil a year ago.

This table highlights how LCID is growing vs broader market. For more details see: LCID Revenue Comparison

[3] Profitability Appears Very Weak

• LCID last 12 month operating income was $-3.0 Bil representing operating margin of -322.8%
• With cash flow margin of -242.7%, it generated nearly $-2.3 Bil in operating cash flow over this period
• For the same period, LCID generated nearly $-2.3 Bil in net income, suggesting net margin of about -247.1%

This table highlights how LCID profitability vs broader market. For more details see: LCID Operating Income Comparison

[4] Financial Stability Looks Very Strong

• LCID Debt was $2.7 Bil at the end of the most recent quarter, while its current Market Cap is $5.6 Bil. This implies Debt-to-Equity Ratio of 48.7%
• LCID Cash (including cash equivalents) makes up $2.8 Bil of $8.9 Bil in total Assets. This yields a Cash-to-Assets Ratio of 31.9%

[4] Downturn Resilience Is Moderate

LCID saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• LCID stock fell 93.5% from a high of $580.50 on 18 February 2021 to $37.55 on 9 November 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $51.40 on 14 December 2023 , and currently trades at $18.41

 
2020 Covid Pandemic

• LCID stock fell 2.6% from a high of $98.90 on 18 September 2020 to $96.30 on 23 October 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 7 December 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read LCID Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.