Lucid Surged Today -- Is the EV Stock a Buy Right Now?

Key Points

• A recent report showing that Tesla has continued to lose market share may have boosted Lucid stock today.

• Tesla's weakening hold on the EV market could be good for Lucid, but the picture for investors is more complex.

• Continued stock dilution poses a big risk for Lucid investors.

• 10 stocks we like better than Lucid Group ›

Lucid (NASDAQ: LCID) stock enjoyed a session of strong gains on Tuesday. The electric vehicle (EV) maker's share price rose 5.2% in the day's trading. Meanwhile, the S&P 500 rose 0.2%, and the Nasdaq Composite rose 0.3%.

It's possible that a recent report showing that Tesla has continued to lose market share factored into Lucid's gains today, but the stock has also been highly volatile recently. Despite today's valuation pop, the stock is still down roughly 9% over the last month of trading -- and it has lost ground since the completion of the company's 10-for-1 reverse stock split.

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Reuters published a report yesterday stating that Tesla's market share had recently fallen to its lowest point in almost eight years amid increasing competition from other players in the EV space. That could be a bullish indicator for Lucid's outlook, but the stock still comes with a high degree of risk.

Is Lucid stock a buy right now?

In the second quarter, Lucid recorded a loss of roughly $739.3 million on revenue of $259.4 million. Large losses have been the norm throughout the EV specialist's history as a publicly traded company, and the company would quickly burn through its cash position of approximately $1.8 billion and could be forced to take on sizable debt if it weren't for the backing of Saudi Arabia's Public Investment Fund (PIF).

The PIF owns a majority stake in Lucid and has regularly provided large cash injections in exchange for new shares of the company's stock. Given that the PIF is already the company's largest shareholder by far, it could be said that the Public Investment Fund faces a smaller dilutive impact on a real-terms basis -- and that other shareholders face outsized risk from dilution.

Should you invest $1,000 in Lucid Group right now?

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.