Lucid Group Stock Forecast: LCID adds 12% on Monday to Friday's 43% gain

Lucid Group (LCID) has reversed course in Monday's premarket. Shares of LCID first shed more than 6% early in Monday's premarket, before rising more than 12% later in the session. This is of course just one session after rumors of an imminent buyout sent Lucid stock up 43% last Friday. Those rumors continued to circulate on Monday without any more clarity that a deal was in the works. 

Lucid stock is trading up 12.3% at $14.45 in Monday's premarket after closing at $12.87 on Friday.

Lucid Group stock news: Will Saudi Arabia's sovereign wealth fund buy up rest of LCID?

Saudi Arabia's Public Investment Fund, a sovereign wealth fund, already owns about two-thirds of Lucid Group. The speculation began last Friday in an article on the Betaville website. The report was labeled "uncooked" – a term the site uses to label more speculative, unconfirmed reports – and said that the Saudi fund might be in talks to own Lucid outright. Prior to Friday's spike, Lucid stock was down over 86% from its all-time high in February 2021 of $64.85. At under $20 billion in market cap prior to Friday, the advanced electric vehicle company probably looks attractive to many bidders.

Friday and likely Monday's surge in price is also helped along by a short squeeze. Since as much as 37% of LCID was sold short, fewer shares were available to buy in the open market, helping to create artificial scarcity. Over 206 million shares traded last Friday, nearly eight times the normal volume.

Bank of America put out a note on Monday discussing the prospects for Lucid. Analyst John Murphy pointed out that Lucid's 500-mile range for its Lucid Air sedan should be quite attractive to the market. Competitors afterall tend to be situated with ranges between 250 and 350 miles. Lucid also features an experienced management time, according to Murphy, that is viewed as more capable of bringing Lucid to mass commercialization than other companies. Bank of America has an $18 price target on Lucid stock and a Buy rating.

Lucid stock has struggled in 2022 as the carmaker was only able to use its industry-leading technology to achieve production of 7,180 units in 2022. Its production ramp up reminds many of the struggles that befell rival Rivian (RIVN) last year and Tesla (TSLA) one decade ago.

Lucid stock forecast

On the 4-hour chart below, the 50 four-hour moving average overtook the 100 four-hour moving average on January 19, so some bulls were probably already expecting a rally. Now bulls will try to take out the $17.80 high from Friday. That range high was brief, but it coincides with the R1 pivot and thus made a good selling point. Traders will also be well aware of past resistance surrounding $14.60 from last October. Support is scant at the moment, but expect traders to sell-off in short order if the Lucid stock price drops below the pivot point at $12.89.

LCID 4-hour chart