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While Nvidia’s (NVDA) fiscal Q4 earnings and the Fed’s meeting minutes will dominate the headlines this week, as well as investors’ minds, electric vehicle (EV) stocks will also be in focus. Both Rivian Automotive (RIVN) and Lucid Group (LCID) are set to release their earnings after the bell today, while Nikola (NKLA) will release its results tomorrow.
The EV sector has been out of favor with markets for quite some time now. Even the formidable Tesla (TSLA) is underperforming the markets in 2024, and trades at less than half of its 2021 highs. Things have been even bleaker for startup EV names, and Lucid stock fell to new all-time lows last month.
LCID stock has since risen sharply, though, even as it's nowhere near its special purpose acquisition company (SPAC) merger price of $10 – let alone the 2021 highs, when it almost became a $100 billion behemoth.
As Lucid Group prepares to release its earnings, here's what I'll be watching in the company’s quarterly report - plus, a look at whether the stock can continue to rise even after the Q4 earnings.
Lucid Group Q4 Earnings Estimates
Analysts expect Lucid Group to report revenues of $181.76 million in Q4 – a YoY decline of almost 30%. Notably, the company also reported a similar decline in its Q3 revenues, as far from being demand-constrained, it finds itself saddled with excess capacity. The price cuts haven’t helped matters, either, and the brutal price war in the EV industry has only intensified in 2024.
The expected fall in Lucid Group's Q4 revenues is not surprising, as the company’s deliveries plummeted almost 12% YoY in the quarter. Notably, the stock sank to all-time lows after the dismal delivery report, but has since recovered somewhat.
To spur sales, Lucid has been lowering prices, and last month it announced yet another price cut. The Lucid Air Pure now starts at $69,900, with additional incentives in the form of a $1,000 charging allowance and free scheduled maintenance for two years.
Ahead of earnings, analysts expect Lucid Group's per-share loss to slightly narrow to $0.28. The company has been a perennial loss-maker, like most other startup EV companies.
What to Watch in LCID’s Q4 Earnings Report
Along with the top-line and bottom-line metrics, I'll be watching out for the following details in Lucid Group's Q4 earnings:
- 2024 guidance: Lucid Group missed its original 2023 guidance amid slowing demand for EVs. During the company’s Q4 earnings call, I'll watch for comments on its 2024 guidance - especially as it recently lowered prices, in an apparent bid to push for higher deliveries
- International expansion and deliveries in Saudi Arabia: Lucid Group has started assembling cars in Saudi Arabia, whose government – which is also its biggest stockholder – has an option to purchase up to 100,000 vehicles from the company. During the upcoming earnings call, I will watch for comments on Lucid’s sales in Saudi Arabia, as well as any further international expansion plans.
- Gross margin guidance: Lucid Group might also provide color on its medium-term gross margin guidance, as well as any new capital raise plans, considering the expected cash burn.
- Price cuts: On a similar note, Lucid Group might also talk about its pricing strategy, as the continued price war might only intensify the cash burn for startup EV companies.
- New technology-sharing partnerships: Last year, luxury carmaker Aston Martin partnered with Lucid to buy electric motors and batteries. During the company’s Q3 earnings call, CEO Peter Rawlinson did not provide specific details, but he said that the company has seen renewed interest in its technology. During the Q4 earnings call, Lucid Group might update markets on any progress on tech partnerships - which, if materialized, can be a key long-term driver for the company.
Will Lucid Group Stock Continue to Rise After Q4 Earnings?
The bar is set quite low for Lucid Group heading into the Q4 report. Even if the company can come up with a reasonably good set of numbers and reassure markets with its guidance, we could see the rally continue.
Notably, Morgan Stanley analyst Adam Jonas, who is bullish on Tesla and Ford Motor (F) in the automotive space, believes that the worst is already priced into Lucid Group shares heading into the Q4 report.
While Lucid Group has a consensus rating of “Hold” from the 12 analysts covering the stock, its mean target price of $5.47 is 47% higher than yesterday’s closing price. Also, the stock even trades below the Street-low target price of $4.
Investors should, however, brace for volatility over the next few quarters amid the continued price war and weak macros - including high interest rates and a slowing economy - that might continue to dampen investor sentiment toward EV stocks.
That said, I believe that Lucid Group, along with Rivian, could be among the “last men standing” in an increasingly overcrowded and hypercompetitive U.S. EV industry, thanks to its strong product proposition and backing from Saudi Arabia, which has opened its coffers to fund the company multiple times since it was founded.
On the date of publication, Mohit Oberoi had a position in: LCID , F , RIVN , TSLA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
