Lucid Group Stock News and Forecast: LCID earnings mean the game is up

Lucid stock falls after the company reports earnings on Monday night.
LCID stock down 13% in premarket on Tuesday as investors punished the earnings miss.
Lucid earnings saw a miss on sales and cut its production numbers.

Ivan Brian FXStreet

Lucid (LCID) stock is falling in the premarket on Tuesday after the company reported worse than expected earnings after the close on Monday. This earnings release was highly anticipated as the company is one of the most followed stocks by retail traders. Many had made their first trade in the investment world on Lucid (LCID) during the pandemic. Now many are finding out the hard way that trading is a long, tough game with a steep learning curve. This is not the place to get emotional or practice the "us vs. them" mentality. The only thing that matters in trading is consistent profitability. That is the score line in this game, nothing else.

Lucid Group Stock News

The numbers were a disappointment. Revenue and earnings per share came in behind estimates. EPS came in at -$0.64 versus -$0.35 expected. Revenue was $26.39 million versus the $36.74 estimate. While these are disappointing numbers, Lucid also cut its full-year production guidance for 2022. The company now expects to produce in the region of 12,000 to 14,000 vehicles in 2022. This is a huge reduction from earlier estimates for a production run of nearly 20,000 for 2022. That is not far from halving your estimate already, and 2022 has barely started.

The company stated: “We’re updating our outlook for 2022 production to a range of 12,000 to 14,000 vehicles. This reflects the extraordinary supply chain and logistics challenges we’ve encountered and our unrelenting focus on delivering the highest quality products. We remain confident in our ability to capture the tremendous opportunities ahead given our technology leadership and strong demand for our cars.”

Given the environment we are in from a macro perspective, this will lead to further selling pressure over the next quarter. The growth sector is unlikely to see any meaningful uptick until the geopolitical backdrop calms down. That will not be the end of it though as the inflationary environment remains. The backdrop of the Russia-Ukraine crisis will keep commodity prices elevated for longer, meaning central banks will have to raise interest rates. The dreaded scenario of stagflation is becoming more possible as the Russia-Ukraine situation escalates. All this means growth stocks and high-risk names will not see any meaningful bounce any time soon. This is not the time to be in names like Lucid (LCID) in our view.

Lucid Stock Forecast

We expect $25 to $22 to be the new range going forward with greater potential for a break below $22. This will then bring $16.13 into the target. Only breaking back above $25.61 gives bulls any chance, but this seems less likely now. A company with quarterly revenues of $26 million but with a market capitalization of $47 billion is a relic of 2021 now. 2022 is a different animal in investing terms, and traders need to come to terms with that.

Lucid stock chart, daily

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Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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