Had been the perma-bears proper all alongside about Lucid Group (NASDAQ:LCID)? They definitely proved their level in 2022, a bruising yr for electrical car (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 based mostly in California. The U.S. and different G8 nations have made numerous commitments in assist of car electrification. But, this rising EV motion apparently hasn’t been mirrored within the LCID share value this yr.
So, it’s been a bumpy street for Lucid’s loyal traders throughout the previous 12 months. In the event you’ve been ready for decrease share costs, congratulations in your knowledgeable timing – and contemplate whether or not there could also be a compelling EV-market cut price with LCID inventory proper now.
The Threat-to-Reward Profile Appears to be like Favorable for LCID Inventory
Typically, you simply have to attend for a inventory to fall 50% or extra earlier than you will be assured that the sellers are almost exhausted. LCID inventory seems to be at or close to its backside.
At the moment, 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 may double from right here.
Moreover, Lucid Group simply efficiently accomplished a capital elevate of round $1.515 billion. This ought to assist scale back the danger of LCID inventory, because the capital infusion means Lucid Group ought to be higher positioned to satisfy its manufacturing schedule whereas creating newer and higher EVs.
Plus, if you happen to suppose that each one EV shares are fraught with volatility, suppose 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 suppose it has.
Lucid Simply Opened New Places within the U.S. and Overseas
One other signal of a positive risk-to-reward profile is that Lucid Group is in growth mode. Because the automaker establishes a geographic footprint on a number of continents, potential traders may really surprise how LCID inventory will 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 called the Dallas Studio. With that, Lucid upped its whole North American Lucid Studio and repair middle areas 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 Good 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 cast a partnership that ought to assist to unravel the battery drawback for the foreseeable future.
Particularly, Lucid Group struck a take care of 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. Nevertheless, the collaboration with Panasonic seals the deal as Lucid seeks to ascertain a multinational market presence.
Why would Lucid select Panasonic as an EV battery provider? Lucid Group CEO Peter Rawlinson explains, “Panasonic is a incredible associate with each progressive expertise and depth of expertise.” I might add that Panasonic’s glorious repute – and maybe, aggressive pricing – might have additionally been components.
Is LCID Inventory a Purchase, In line with Analysts?
Turning to Wall Avenue, LCID is a Maintain based mostly on three Buys, two Holds, and three Promote rankings. The typical Lucid Group value goal is $14.74, implying 101.5% upside potential.
Conclusion: Ought to You Take into account Lucid Inventory?
Rawlinson mentioned he expects Lucid Group to begin manufacturing of the Gravity SUV in 2024, and the battery take care of 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 state of affairs introduced by LCID inventory at its present value. Subsequently, anybody who hasn’t given up on the EV trade, not solely within the U.S. however internationally as properly, ought to noticeably contemplate a share in Lucid Group inventory at this time.
