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Is Lucid Stock a Solid Long Term Investment?


In 2007, Atieva was founded by Bernard Tse and Sam Weng as a company headquartered in Newark, California, that originally focused on building electric vehicle batteries and powertrains for a variety of other vehicle manufacturers. Since then, it has rebranded to Lucid Motors as of October 2016 and has since announced they have been developing an all-electric high-performance luxury automobile. The current Chief Executive Officer (CEO) of Lucid is Peter Rawlinson. Once upon a time, he was the vice president of engineering at Tesla. Lucid's vice president, Derek Jenkins, used to be the head of design at the North American operations of Mazda. Some of Lucid's top investors have included Tsing Capital, Mitsui, Venrock, and JAFCO. These names, as well as a handful of other investors, have all shared a vested interest in Lucid Stock and where the future of this company is going.

When Lucide announced on November 29, 2016, they planned to construct a $700 million USD manufacturing plant in Casa Grande, Arizona, it was projected to employ up to 2,000 workers by the mid-2020s that would build 20,000 vehicles and expand up to 130,000 automobiles per year. Lucid's factory was then striving to design to support a maximum capacity of 380,000 vehicles per year. There was a plan to break ground in 2017 and have cars in production by 2019. starting on September 28, 2021, the first lineup of vehicles began to emerge from the assembly line. September 17, 2018, marked the official announcement by Lucid Motors that their talks with the Public Investment Fund of Saudi Arabia saw a value of over $1 billion USD. This investment was completed by April 2019 that saw the engineering and testing of the Lucid Air Model, which was the first phase of its manufacturing plant construction in Casa Grande, Arizona. By December 2020, this first phase completed construction. The second phase is currently underway that sees to increase production capacity from its current 34,000 vehicles per year to 90,000. There are four phases planned for Lucid Motors, Arizona that intend to have a combined production capacity of 400,000 vehicles per year.

As of February 2021, Lucid Motors announced an $11.75 billion USD deal to merge with Churchill Capital Corp IV, which is a publicly-traded, special purpose acquisition company (SPAC). It is Lucid's intention to produce its Project Gravity SUV by the year 2023, as well as offer a competitor to Tesla's Model 3 by either 2024 or 2025. In July 2021, The Wall Street Journal made a report that the Public Investment Fund will own over sixty percent of Lucid once the company finally goes public. The fund will record a profit of nearly $20 billion USD from its investment in Lucid in 2018. As of September 2021, Lucid began building the company's first all-electric Air Sedans and has since been delivering them to interested customers. Known as the Dream Edition, the first group of twenty reservations of this vehicle was sent out on October 30, 2021.

Lucid Stock Ride

According to Yahoo Finance, there was a five percent pop that resulted from the lockup expiration date of January 19, 2022. Shareholders of Lucid's NASDAQ: LCID saw the legacy shareholders of Lucid own 1.19 billion shares out of the 1.61 billion shares outstanding. For investors, this is considered significant as the volume for Lucid Stock today has been so far trending near its daily average. Now with the lockup expiration already passed, there are questions in place about the fate of Lucid. When the expiration date of January 19th struck, one key observation was the legacy shareholders were not performing a mass sellout. With the daily average remaining as it has, it suggests most of these legacy shareholders have no intention of stepping out of the picture immediately. However, these shareholders can sell at any time in the future, so this is something interested investors need to watch. Does this mean investing in Lucid Stock as a long-term investment is advised? Like all stock investments, it's a gamble. However, with so much focus on turning the world of the automotive industry into an all-electric operation that seems determined to leave old combustion-style automobiles to dust, it seems to invest in companies that have continued to show growth and promise like Lucid isn't such a bad idea, but is it really long-term investment-worthy?

The lockup expiration for private investment as public equity (PIPE) shareholders took place on September 1, 2021. However, PIP shareholder Magnetar Financial opted to wait until the end of the year to cut its position with Lucid by ninety-four percent. Back in 2017, Magnetar was one of the earliest investors of Lucid with a $250 million USD backing, as well as purchasing another ten million shares of LCID stock at fifteen dollars per share as a PIPE investor. Interested parties following the progress of Lucid will also be monitoring the Saudi Public Investment Fund (PIF) as it is the largest legacy shareholder that has invested into LCID stock with a 67.2 percent stake. However, Saudi's PIF is known to hold investments for extended periods of time, so unless something dramatic occurs, it's unlikely a major sale will come from their end.

When the previous Lucid lockup expiration for PIPE shareholders approached in January of 2021, the LCID stock fell by over twenty percent before the actual expiration date. However, a month after the PIPE expiration, Lucid traded thirty-five percent higher. At the moment, LCID Stock trades more than 130% higher relative to its PIPE expiration day closing price. Even though this doesn't imply that Lucid Stock will trade at such a high percentage a month from today, it is noteworthy to see how the stock performed after this similar event. The next expiration date for Lucid Stock falls on January 23, 2023. This will be the day Churchill sponsors will be permitted to sell their shares. At the moment, those sponsors hold 51.7 million shares, which is significantly less than the legacy shareholders. The dramatics of what occurred in January 2021 and January 2022 will not be nearly as intense once January 2023 rolls around.

Driving With Lucid

When Lucid Motors began delivering its Lucid Air model, the Dream Edition as a luxury EV sedan as of October 30, 2021, it also promised to roll out its Gravity SUVs in 2023. On July 13, 2021, Lucid Motors announced it had more than 10,000 reservations for the Lucid Air, which represents over $900 million USD in anticipated sales. Twenty of these units are already sold and delivered, namely the Dream Editions. This information has already been filed with the U.S. Securities and Exchange Commission. Lucid Motors promises its Air Models to beat out the Tesla Model S and the Amazon-backed Rivian R1T in battery efficiency. It has also made claims its EV technology also beats out what Audi, Jaguar, and Porsche have in store as their EV units. With the in-house production located in Casa Grande, Arizona, this enables Lucid to closely oversee every stage of development. The Lucid Air boasts the ability to deliver five hundred miles of travel range, making it one of the longest, quickest, and fastest-charging electric vehicles on the market. The Environmental Protection Agency (EPA) has since confirmed Lucid's claim by noting that Lucid Air has a 520-mile range. As for additional features with the Lucid Air, it has what Lucid calls a glass cockpit, as well as an autonomous driving system that uses thirty-two sensors, including long-distance Lidar, a safety technology that Tesla has purposely avoided. The estimated cost of a fully-loaded Lucid Air has been $160,000 per vehicle. There are cheaper versions valued at $70,000 for 2022 that are also expected, at least, according to the Wall Street Journal's account.

Riding With Lucid

At the moment, Lucid's LCID Stock has been trading at nearly forty percent off its highs. It remains extended past a 28.49 buy point in a cup-with-handle base. As far as huge gains go, that has faded, at least for now. According to the IBD Stock Checkup, LCID stock shows a modest rating, which is at number sixty-five out of the best possible score of ninety-nine, at least with the IBD composite rating. This is a rating system that helps investors measure a stock's metrics and it's not uncommon for weaker IBD composite ratings to show up in new stock issues, which is what LCID Stock is experiencing at this time.

When the shareholders of Lucid Motors agreed to approve the merger of the blank check company of Churchill Capital Corp. IV on July 23, 2021, CEO Peter Rawlinson reported to Bloomberg that the company, along with its Lucid Air production, was proceeding well. And so far, according to the numbers of 2021, it has. When the September 1, 2021, lock-up period for PIPE investors expired, this placed the position of these particular shareholders to sell out, which they did. The stock plunged by almost eleven percent as a result. Since then, progress in favor of Lucid Motors has continued as of September 16, 2021, marking the EPA's official rating of the Lucid Air of being able to travel 520 miles of range, based on a full battery charge. This confirmed Lucid's claim its model was better than the Tesla S Long Range by more than one hundred miles. This added to Lucid's credibility, something to which attentive investors pay attention. Already, twenty Dream Editions of the Lucid Air have been delivered as of October 30, 2021, plus another 520 that has been slated for production. The rest of the Lucid Air EV sedans already have more than 13,000 reservations for them, which resulted in a twenty-four percent increase in share investments. During the year 2022, the Lucid Air models are also expected to arrive in Europe and the Middle East, followed by a 2023 launch in China. When Lucid announced on December 9, 2021, its intent to over $1.75 billion in convertible senior notes, LCID shares dove by over eighteen percent in response. When January 3, 2022, Green Car Report named the Lucid Air as the Best Car to Buy in 2022, the Lucid stock surged by over seven percent by the end of the day.

Is Lucid Worth It?

While the first big wave of Lucid Motors as a stock investment may seem to have run its course, the ride is far from over. At the moment, the shares are trying to regain the fifty-day moving average, which would be rather bullish for the stock's base-building prospects. Lucid Motors stock promises a long-term EV stock that already began its delivery of vehicles as of October 2021. At the moment, Lucid stocks are sitting dancing around the forty percent mark, which suggests now is not the best time to buy. However, do keep in mind that the company doesn't have any serious earnings at the moment, so this is speculation at best. The best bet for investors is to wait for a new base to offer a new buy point with the stock is considerably more extended than its previous entry.

As a long-term investment, Lucid Motors and its LCID stock still show promise and will likely have some tricks up its sleeve as so far it has managed to back each of the claims they've made with proof. With 2022's picture seeing deliveries expected for Europe and the Middle East, then in China in 2023, the stock growth of Lucid is still there. Since Lucid has managed to outdo Tesla in the battery performance range as it boasted, Tesla will seek to compete against Lucid in this regard, which will spawn Lucid to stay ahead of the mighty Tesla. There are also other car manufacturers in the picture that are each vying for the top dog title. As the strongest companies survive, the weaker will likely become acquisitions along the way. Where Lucid may fit in the grand scheme of things, should the company continue with its top-notch technological pace, could suggest the company has a solid future ahead of them. For a solid, long-term investment that's steady without surprises, Lucid may be worth it, but this boils down to timing. At the forty-percent mark where LCID stock is concerned, should the coveted fifty seem achievable, the investment may still be worth it. However, if the mark doesn't see any improvement at this point, it might be a better idea to hold off and see if that percentage works better in your favor.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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