Lucid Is Skyrocketing Today -- Is the Stock a Buy Right Now?

Key Points

• Lucid stock is getting a big boost from positive analyst coverage today.

• Cantor Fitzgerald thinks Lucid stock could hit $20 per share over the next year.

• Lucid's relationship with its largest shareholder could be both a strength and a weakness for other investors.

• 10 stocks we like better than Lucid Group ›

Lucid (NASDAQ: LCID) stock is seeing strong bullish momentum in Friday's trading thanks to new coverage from an analyst. The electric vehicle (EV) company's share price was up 12.3% in the daily session as of 2 p.m. ET.

Lucid stock is rising quickly today after Cantor Fitzgerald published new coverage. Before the market opened this morning, Cantor released a note on Lucid that raised its one-year target on the stock from $3 per share to $20 per share. While the extent of the pricing increase is exaggerated due to the company's recent 1-for-10 reverse stock split, Cantor's new valuation target still implies upside of roughly 10% even after big gains today.

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Lucid stock has seen high levels of volatility connected to the recent execution of the company's 1-for-10 reverse stock split. The split took effect after the market closed on Aug. 29, and shares saw their first day of trading under the new structure on Sept. 2.

Is Lucid stock a buy right now?

With the Q2 results that it published in August, Lucid announced that it had posted a loss of roughly $739.26 million on sales of $259.4 million in the period. Meanwhile, the business closed out the period with cash and equivalents totaling roughly $1.8 billion.

Normally, losses on the levels that Lucid has been posting would not be sustainable -- but the company has a large and powerful financial backer. Saudi Arabia's Public Investment Fund (PIF) is Lucid's majority stakeholder and regularly provides the EV specialist with capital injections. This relationship could wind up playing a defining role in performance for long-term shareholders.

While the Saudi PIF's heavy investment and continued support of Lucid suggests that the business's large losses are less concerning than they would be in normal circumstances, the dynamic also poses another risk factor for investors. Lucid will likely continue to sell stock to the PIF in order to raise funds, and that poses a big risk to other shareholders.

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.