Where Will Lucid Stock Be in 1 Year?

Lucid (NASDAQ: LCID), a fledgling producer of luxury electric vehicles (EVs), went public by merging with a special purpose acquisition company (SPAC) on July 26, 2021. The combined company's stock opened at $25.24 on the first day. It more than doubled to a record high of $55.52 four months later, but now trades at roughly $2 a share.

Lucid initially attracted a lot of attention because it was led by Tesla's former chief vehicle engineer, Peter Rawlinson. But like many other SPAC-backed EV makers, it disappointed its investors by missing its own rosy production targets. Could this out-of-favor EV maker's stock finally bottom out and head higher over the next 12 months?

Image source: Lucid.

Why did Lucid disappoint the market?

Lucid delivered its first Air sedans in late 2021, and it originally claimed it could deliver 20,000 vehicles in 2022 and 49,000 vehicles in 2023. It planned to launch its second vehicle, the Gravity SUV, by the end of 2023.

But Lucid only delivered 4,369 vehicles in 2022 and 6,001 vehicles in 2023. It also postponed the launch of the Gravity SUV to late 2024. It mainly blamed its slowdown on supply chain constraints and other macro headwinds, but its price cuts also indicated it was struggling to keep up with its competitors in the crowded and cooling EV market.

Lucid generated just $595 million in revenue in 2023, which was well below the $5.53 billion target it had set in its pre-merger presentation. For 2024, Lucid expects to produce approximately 9,000 vehicles, and analysts expect its revenue to rise 29% to $767 million as its net loss widens from $2.83 billion to $2.95 billion.

What does Lucid plan to do in 2025?

Lucid's production numbers are anemic, but Saudi Arabia's Public Investment Fund (PIF) swooped in and acquired more than 60% of its shares over the past six years. The PIF also helped finance the construction of Lucid's new Saudi Arabian plant, and the Saudi Arabian government even agreed to purchase 100,000 of its vehicles over the next decade.

That support, along with a series of capital raises, enabled Lucid to end the third quarter of 2024 with $5.16 billion in total liquidity. It raised an additional $1.75 billion in October, and it claims it now has enough cash to last "well into 2026."

Lucid needs to achieve three major goals over the next 12 months. First, it plans to expand the annual production capacity of its AMP-1 plant in Arizona from 34,000 vehicles to 90,000 vehicles to support the mass production of its Gravity SUVs. Over the long term, it expects to eventually expand AMP-1's annual capacity to 400,000 vehicles by 2028.

Second, Lucid will roll out a cheaper version of the Gravity SUV, which currently starts at $94,900, in late 2025 to keep pace with Tesla's Model X, which starts at $82,000. Lastly, it needs to expand its AMP-2 plant in Saudi Arabia from its current annual capacity of 5,000 vehicles toward its near-term goal of 155,000 vehicles.

Assuming Lucid successfully ramps up its deliveries of the Air and Gravity, analysts expect its revenue to more than double to $1.74 billion in 2025, then jump 74% to $3.03 billion in 2026.

With an enterprise value of $5.33 billion, Lucid looks undervalued at 3 times next year's sales. For reference, Tesla trades at 11 times next year's sales. That might be why Lucid's insiders were net buyers over the past 12 months.

Analysts expect Lucid to slightly narrow its net loss to $2.87 billion in 2025, but it won't run out of cash anytime soon. However, its number of outstanding shares has still increased 86% since its public debut, and it will likely keep diluting its investors with its stock-based compensation and additional stock offerings in the future.

Where will Lucid's stock be in a year?

Lucid still has a lot to prove, but I believe its stock could finally bottom out if it achieves its near-term goals. Declining interest rates and any positive developments for the sluggish EV market could also bring back the bulls. So while I don't expect Lucid to soar back toward its record highs anytime soon, I believe its stock has a shot at climbing higher over the next 12 months.

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Leo Sun 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.