Why Lucid Group Stock Slumped Almost 20% in August

Key Points

• Lucid is launching its all-electric Gravity SUV in Europe.

• It also has a partnership with Uber to supply 20,000 or more Gravity SUVs.

• The EV maker, however, is struggling to scale production.

• 10 stocks we like better than Lucid Group ›

Shares of Lucid Group (NASDAQ: LCID) were trading at around $2 apiece on Aug. 29. As of 1:22 p.m. ET today, the electric vehicle (EV) stock is trading at about $19.13 per share.

But it's not what you think. Lucid stock fell 19.5% in August and has lost another 5% so far this month, according to data provided by S&P Global Market Intelligence.

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You see, Lucid executed a 1-for-10 reverse stock split after market close on Aug. 29, which technically boosted its absolute share price tenfold without any change to investors' value of investment. Those investors were left feeling disappointed last month after the EV maker's latest numbers came out.

Image source: Getty Images.

Lucid delivered a record number of vehicles in its second quarter, but that was only about 3,309 vehicles, although the company produced 3,863 units during the quarter.

Worse yet, Lucid cut its production guidance for the full year to 18,000 to 20,000 units from its earlier forecast of 20,000. A production estimate cut is much worse when you consider that Lucid targeted 20,000 deliveries way back in 2022 -- and missed that goal miserably.

Moreover, Lucid posted a 8% higher year-over-year net loss for the quarter despite a 30% rise in revenue. So even after years of operations, Lucid continues to struggle with high production costs.

Is the drop an opportunity to buy Lucid stock?

September has kicked off on a better note for Lucid in terms of business developments.

Lucid just secured $300 million from ride-hailing leader Uber Technologies (NYSE: UBER). The two companies struck an autonomous robotaxi partnership in July, under which Uber plans to deploy 20,000 or more Lucid Gravity SUVs equipped with robotics company Nuro's Level 4 autonomy software over the next six years. Lucid said at the time that Uber "plans" to invest hundreds of millions in it. The $300 million that the EV maker received in early September confirms Uber's commitment to the deal.

On Sep. 8, Lucid began taking orders for Gravity SUVs in Europe. It will start deliveries by early 2026. Lucid is betting big on the Gravity overall. Uber's deal, meanwhile, is one of Lucid's most significant partnerships so far and underscores its EV technology.

The only thing Lucid must do now to win back investor confidence is solve its manufacturing problems and scale up production capacity. The problem is, this "only thing" is a big challenge, and it's hard to predict when or how Lucid will resolve it. Bear that in mind if you're thinking of buying the stock.

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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.