Lucid: A Most Improbable Investment

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Lucid (LCID 2.92%). The name itself sounds like a forgotten dream, or perhaps a particularly polite request. Its stock, however, has recently been experiencing a gravitational pull more akin to a collapsing star – down over 70% in the last twelve months. This, in the grand scheme of things, is rarely a sign of a thriving enterprise, but then again, most enterprises aren’t trying to build electric cars, which is, upon reflection, quite a peculiar thing to do. The company emerged from the ether in 2021, via a process known as a SPAC merger – a financial maneuver so complex it makes untangling Christmas lights seem straightforward – and has, shall we say, encountered a few…minor logistical challenges.

Why Did Lucid’s Stock Fall Into a Wormhole?

It all started with Peter Rawlinson, a man who once oversaw the development of the Tesla Model S. (A vehicle which, it should be noted, operates on the principle of converting electrical energy into kinetic energy, a concept that continues to baffle some accountants.) He brought a certain…expertise to Lucid, but expertise, it turns out, is not always enough. Like many other ventures born from the enthusiasm of SPACs, Lucid promised a great deal and delivered…less. It’s a bit like ordering a spaceship and receiving a rather stylish bicycle. Still functional, but lacking a certain…altitude.

The initial projections were, to put it mildly, optimistic. 20,000 vehicles in 2022, 49,000 in 2023, and a truly ambitious 90,000 in 2024. The reality, however, was a more modest 4,369, 6,001, and 10,241 respectively. (One suspects the sales team had a challenging time explaining that discrepancy.) Supply chain issues, the usual competitive pressures, and the ever-shifting sands of economic policy – inflation, interest rates, reduced subsidies – all conspired to make things…difficult. And then, in early 2025, Mr. Rawlinson departed, leaving the captain’s chair momentarily vacant. (One imagines the board meetings were…interesting.)

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Can Lucid’s Stock Escape the Event Horizon?

The optimists (and there are always optimists, bless their hearts) point to the support of the Saudi Arabian Public Investment Fund (PIF), which owns over 60% of Lucid. (A substantial stake, one might say. Enough to potentially influence the trajectory of the company, much like a sufficiently large planet influencing the orbit of a smaller one.) And, finally, at the end of 2024, Lucid began shipping its second vehicle, the Gravity SUV. (A vehicle, presumably, designed to defy gravity, or at least make a spirited attempt.)

In July, Lucid forged a partnership with Uber and Nuro to deploy at least 20,000 autonomous Gravity SUVs across the U.S. over the next six years. (One can envision a future filled with self-driving SUVs, silently gliding through the streets. Or, alternatively, a chaotic traffic jam of autonomous vehicles all trying to merge onto the same highway.) They are also fulfilling a ten-year order for 100,000 vehicles from the Saudi Arabian government, which began in 2022. (A significant order, to be sure. Though one wonders if the Saudi government has considered the logistical challenges of parking 100,000 electric vehicles in the desert.)

Lucid plans to launch its third vehicle, the more affordable “Earth” SUV, in late 2026 or early 2027. (A vehicle, presumably, designed to be driven on Earth. A surprisingly niche market, one might think.) This is intended to compete more effectively against Tesla and other EV manufacturers. They are also upgrading their AMP-1 and AMP-2 plants in Arizona and Saudi Arabia. (A commendable effort, though one suspects the construction crews are facing a few challenges of their own.)

Analysts predict Lucid’s revenue will more than triple between 2025 and 2027, from $1.3 billion to $4.6 billion. They also expect losses to narrow gradually. (A hopeful prediction, though one should always approach analyst forecasts with a healthy dose of skepticism. After all, predicting the future is a notoriously unreliable endeavor.)

With a market capitalization of $3.3 billion, Lucid appears undervalued at 1.4 times this year’s sales. Tesla, being larger and more profitable, trades at 15.2 times sales. Furthermore, as of January 30th, 43% of Lucid’s float was being shorted. (A rather significant number, suggesting a considerable degree of skepticism among investors. Or perhaps a particularly enthusiastic group of bears.) This combination of a bargain-bin valuation and high short interest could set the stage for a substantial short squeeze on any positive news. Lucid remains a highly speculative stock, but I believe it could bounce back over the next 12 months if it steadily ramps up production without any major hiccups. (Though, in the world of electric vehicles, “no major hiccups” is a phrase rarely uttered.)

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2026-02-17 19:02