Had been the perma-bears proper all alongside about Lucid Group (NASDAQ:LCID)? They actually proved their level in 2022, a bruising 12 months for electrical automobile (EV) producers and for Lucid, particularly. Nonetheless, I’m bullish on Lucid Group inventory as a result of the corporate is quickly increasing its presence and proactively fixing its battery-sourcing drawback.
Lucid Group is an EV producer that’s primarily based in California. The U.S. and different G8 nations have made numerous commitments in assist of auto electrification. But, this rising EV motion apparently hasn’t been mirrored within the LCID share value this 12 months.
So, it’s been a bumpy highway for Lucid’s loyal buyers through the previous 12 months. For those who’ve been ready for decrease share costs, congratulations in your professional timing – and think about whether or not there could also be a compelling EV-market cut price with LCID inventory proper now.
The Threat-to-Reward Profile Seems to be Favorable for LCID Inventory
Typically, you simply have to attend for a inventory to fall 50% or extra earlier than you may be assured that the sellers are practically exhausted. LCID inventory seems to be at or close to its backside.
Presently, Lucid Group inventory is close to its 52-week low, at $7 and alter. We’ll quickly observe that the consultants on Wall Avenue, on common, anticipate that the share value might double from right here.
Moreover, Lucid Group simply efficiently accomplished a capital increase of round $1.515 billion. This ought to assist cut back the danger of LCID inventory, because the capital infusion means Lucid Group needs to be higher positioned to fulfill its manufacturing schedule whereas creating newer and higher EVs.
Plus, for those who assume that each one EV shares are fraught with volatility, assume once more. LCID inventory has a surprisingly low five-year month-to-month beta of 0.4. In different phrases, the share value hasn’t jolted up and down as a lot as you may assume it has.
Lucid Simply Opened New Areas within the U.S. and Overseas
One other signal of a positive risk-to-reward profile is that Lucid Group is in enlargement mode. Because the automaker establishes a geographic footprint on a number of continents, potential buyers may truly marvel how LCID inventory may be so low cost now.
Beginning within the U.S., Lucid Group opened its first retail “Studio” (i.e., dealership) location in Texas; this location is named the Dallas Studio. With that, Lucid upped its whole North American Lucid Studio and repair middle places rely to 29.
Not lengthy after that, Lucid established its first Swiss Studio location within the “coronary heart of Geneva.” That marked Lucid Group’s second European retail location. Subsequent, Lucid Group opened its third location in Europe by breaking floor on a service, supply, and gross sales middle in Hilversum, Netherlands.
Lucid Discovered a Excellent Accomplice for EV Battery Sourcing
As supply-chain disruptions wreak havoc on the worldwide automotive trade, EV makers generally should get artistic in sourcing batteries for his or her autos. To that finish, Lucid Group solid a partnership that ought to assist to resolve the battery drawback for the foreseeable future.
Particularly, Lucid Group struck a cope with Japanese electronics large Panasonic (OTCMKTS: PCRFY). This can be a multi-year settlement through which Panasonic will provide batteries for Lucid’s Lucid Air EV in addition to the upcoming Gravity SUV.
Lucid Group has already introduced the institution of a battery-production facility in Kansas. Nonetheless, the collaboration with Panasonic seals the deal as Lucid seeks to determine a multinational market presence.
Why would Lucid select Panasonic as an EV battery provider? Lucid Group CEO Peter Rawlinson explains, “Panasonic is a improbable associate with each progressive know-how and depth of expertise.” I’d add that Panasonic’s wonderful popularity – and maybe, aggressive pricing – could have additionally been elements.
Is LCID Inventory a Purchase, In line with Analysts?
Turning to Wall Avenue, LCID is a Maintain primarily based on three Buys, two Holds, and three Promote scores. The typical Lucid Group value goal is $14.74, implying 101.5% upside potential.
Conclusion: Ought to You Take into account Lucid Inventory?
Rawlinson stated he expects Lucid Group to start out manufacturing of the Gravity SUV in 2024, and the battery cope with Panasonic will assist the automaker obtain that aim. Furthermore, Lucid’s rising regional presence ought to make the automaker a fierce competitor within the world EV house.
Lastly, worth seekers ought to observe the favorable risk-to-reward situation offered by LCID inventory at its present value. Due to this fact, anybody who hasn’t given up on the EV trade, not solely within the U.S. however internationally as effectively, ought to significantly think about a share in Lucid Group inventory at present.
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