With Growth Poised to Explode, Is Lucid Stock Finally a Buy?

Lucid Group (NASDAQ: LCID) appears to be one of the benefactors of Tesla's recent stumble and fall. Lucid management noted an uptick in customers trading in their Teslas for a possibly less politically charged ride. And while the broader U.S. electric vehicle (EV) industry is struggling to grow as many anticipated, Lucid has set itself up extremely well for growth over the coming year.

But does all this make it a buy finally? Let's find out.

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Setting records

The broader EV industry might be sputtering right now, and investors might be grappling with the impact of tariffs, but Lucid has been on fire, in a good way. Lucid delivered 3,109 vehicles during the first quarter, a solid 58% jump compared to the prior year.

It marked the sixth straight quarter for record deliveries, and it comes right on the cusp of Lucid accelerating production and deliveries for its most recent launch, the Gravity SUV. Lucid had only recently become satisfied with producing all the inventory needed for employees, studios, and test driving, and can now accelerate production for mainstream consumers.

For investors who have grown accustomed to Lucid's strong delivery performance after years of disappointments, the good news is that the Gravity SUV should easily drive the company's results going forward. In fact, the Gravity SUV is estimated to have a market size six times that of Lucid's Air sedan. Analysts expect Lucid sales to increase 73% in 2025 and another 96% jump in 2026 compared to prior years.

That's not even taking into account the upcoming midsize platform that will underpin numerous models at a more affordable price tag.

Lucid's Gravity SUV. Image source: Lucid.

Lucid's surge also comes at a good time as once-dominant EV player Tesla is facing consumer backlash due to CEO Elon Musk's brief stint in politics, which has resulted in the downward spiral of sales in key markets. In fact, Lucid's interim CEO, Marc Winterhoff, even noted there was a dramatic uptick in recent months in orders from former Tesla drivers.

Is Lucid a buy now?

With momentum seemingly in Lucid's corner in the near-term, despite a stagnating U.S. EV market, it might look like a good time for long-term investors to jump in. But there are a few things to consider.

The first red flag came after reporting a near $400 million fourth-quarter loss when the EV maker announced that CEO Peter Rawlinson, who led the company for 12 years, would be stepping down. Lucid did its best to downplay the situation, but analysts weren't buying it, going as far to say product development could stall, consumer demand could be dampened, and additional funding opportunities could be at risk.

It's also true that one of the biggest risks facing Lucid investors is the company's access to funding. The young company is rapidly burning through cash; its shareholder dilution is accelerating; and Saudi Arabia's Public Investment Fund (PIF) owns roughly 60% of Lucid through multiple investments throughout the company's life.

On one hand, this is a substantially well-funded partner that gives Lucid access to much needed capital. On the other hand, being so reliant on one investor is never a good thing. Should Saudi's PIF pull support, it would be a massive overhang on the stock and make accessing funding more challenging and expensive.

Ultimately, for as much momentum and potential as Lucid has, , there's too much uncertainty facing the company right now for most investors to buy in. The company needs to find the right leadership to lead the company and reassure investors.

It also needs to reduce its cash burn while improving scale and margins. Plus, it needs to navigate potential industry supply disruptions, broader EV demand decline, and potential price increases due to tariffs. Lucid needs to execute the production ramp of the Gravity SUV and have it be a hit with consumers.

If Lucid does all of those things, then it might be time to buy before the company goes into its next growth phase driven by a new midsize platform and more affordable price tag of around $50,000.

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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.