Lucid stock price has recovered this month, moving from a low of $15 to $24, its highest point since August 5. Still, it remains about 28% below its highest point in 2024. This article explains why the LCID shares jumped and why it remains at risk of a crash.
Why Lucid stock price jumped
LucId Group share price jumped after receiving a financial boost from Uber, the biggest ride-hailing service globally. Uber invested $300 million into the business, becoming its second-biggest investor after Saudi Arabia’s PIC.
On top of this investment, Uber has announced that it would purchase thousands of Gravity vehicles from the company. It joined Saudi Arabia, which has committed to buy 100,000 vehicles in the next few years.
Therefore, the LCID stock price has soared as investors predict that the Uber partnership will lead to more sales over time.
LCID faces substantial risks ahead
Lucid Group faces major risks ahead. The main one is from the Donald Trump administration, which has ended the popular $7.500 tax credit for electric vehicle buyers. This means that the company’s revenue growth will wane in the coming years.
The average estimate among analysts is that the company’s revenue will jump by 89% in Q3 to $378 million and by 94% in Q4 to $456 million. This will bring its annual revenue to $1.3 billion followed by $2.5 billion next year.
This quarter’s revenue will grow because of the Gravity launch and the fact that many Americans rushed to buy the vehicle before the tax credit expired.
Lucid’s revenue will also be affected by the loss of the emissions trading revenue. The company has not said how much it will lose, but analysts believe that the figure is substantial. Rivian has estimated that the business will cost it over $600 million of high-margin revenue annually.
While Rivian’s revenue is expected to grow, its profit is also not doing well as it is losing millions of dollars per vehicle. The most recent results showed that its net loss narrowed to $539 million from $643 million. However, the free cash outflow moved from $741 million to $1 billion.
The other main risk is that the company has confirmed that it will run out of cash in 2026. In a statement to the FT, the CEO said:
“The money that we have right now will take us until the second half of 2026. We’ll have to raise additional funds before we get profitable or break even on our own.”
Lucid Group has been a highly dilutive company over the years. It ended the last quarter with 307.23 million in outstanding shares, up from 20 million in 2021. This trend will now continue as the management has hinted.
Lucid share price technical analysis
LCID stock chart | Source: TradingView
The daily timeframe chart shows that the LCID stock price has rebounded in the past few weeks, moving from a low of $15.26 earlier this month to $24 today.
It has moved above the important resistance level at $19.5, its lowest level in November last year, March, and July this year.
The stock has moved above the 50-day and 100-day Exponential Moving Averages, while the Relative Strength Index (RSI) and the MACD have all pointed upwards.
Therefore, the most likely scenario is where the stock retreats in the coming months as investors wait for another capital raise. If this happens, the next level to watch will be the year-to-date low of $15.2.
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