Why Lucid Stock Is Skyrocketing Today
Key Points
Rockwell Automation announced today that it will be providing software for Lucid's manufacturing plant in Saudi Arabia.
Lucid stock is rocketing higher on the news, but the significance of the announcement could be less than valuation gains might suggest.
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Lucid (NASDAQ: LCID) stock is surging in Wednesday's trading. The company's share price was up 13.8% as of 12:45 p.m. ET amid the backdrop of 0.2% gain for the S&P 500 and a 0.1% gain for the Nasdaq Composite.
The stock is moving higher today following news that Rockwell Automation will provider services to Lucid's manufacturing plant in Saudi Arabia. Despite today's big gains, the company's share price is still down 64% over the last year.
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Lucid stock surges on automation hopes
Rockwell published a press release this morning announcing that it will be providing technologies to support the expansion and operation of Lucid's manufacturing plant in Saudi Arabia. The electric-vehicle specialist will be using Rockwell's software to manage and improve the efficiency of all aspects of manufacturing at the facility.
What's next for Lucid?
Lucid stock can sometimes make big moves on relatively little news, and investors probably shouldn't bet on today's pop translating to sustained bullish momentum. The integration of Rockwell's software could provide meaningful benefits to Lucid's Saudi Arabian manufacturing facility, but big structural issues with the business and stock remain.
Lucid continues to post negative gross margins on each vehicle it sells, and manufacturing scaling has proceeded at a relatively slow pace compared to many previous forecasts. As a result, the company continues to be far away from leveraging the economies-of-scale benefits needed to stop the business from posting massive losses.
Should you buy stock 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.
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