Lucid Motors (NASDAQ:LCID) is a luxury EV manufacturer which has had a rather, shall we say, bumpy ride over the past few years. Debuting on the NASDAQ via a SPAC merger on July 26, 2021, the company say its stock price initially soar from around $25 per share to more than $55 a few months later. However, after years of market turbulence within the EV sector and missed production and growth targets, the company’s shares now trade at a fraction of their IPO price (around $2.75 per share at the time of writing) less than five years later. 

So, the question many investors have is whether this is an EV stock worth considering at these beaten-down levels. After all, one might expect most of the bad news tied to this stock to be baked into its current price.

And while industry leaders like Tesla clearly have a stranglehold on the market (and perhaps more of a stranglehold now that the $7,.500 federal EV tax credits are likely to be removed), Lucid remains among the leading competitors in this space many investors are watching closely.

Here’s why I think it’s entirely plausible that Lucid could make a big comeback in 2025. Here’s what would need to happen for this to be the case.

Key Points About This Article:

• Lucid is among the leading luxury EV makers that’s been beaten down by the market in recent years.
• Let’s dive into what could lead to a resurgence in Lucid stock in 2025 and in the years to come.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Recent Developments Don’t Present a Compelling Case

Lucid began delivering its Air sedans in late 2021, with rather ambitious goals around future production targets, which analysts and investors used to build their valuation models for the company. The company suggested it would be able to deliver 20,000 vehicles in 2022 and 49,000 in 2023, with plans to launch the Gravity SUV by late-2023. However, Lucid only managed to deliver 4,369 vehicles in 2022 and 6,001 in 2023, postponing the Gravity’s debut to late-2024 due to supply chain issues and competitive pressures in the slowing EV market. 

This reality has led many investors to discount the company’s growth and production targets moving forward, and that makes sense. After all, this is a company that produced less than $600 million in revenue last year, while its initial revenue projection was more than $5.5 billion. And while the company’s revenue is expected to increase this year to around $767 million (a 29% increase), that’s far below this initial number.

The thing is, as expectations have been reset, and the company’s losses (nearly $1 billion in Q3 alone) have been priced in, the question investors have is whether this stock is worth buying on its massive decline. If the company can achieve a meaningful turnaround and see production and sales growth over time, perhaps there’s some light at the end of the tunnel. And with the backing of Saudi Arabia’s Public Investment Fund (PIF) which put another $1.5 billion into the company, some investors have hope. After all, the PIF doesn’t like losing money, so there could be plenty of future support ahead, though there are questions on this front as well. 

Despite extending its financial runway into 2026, the need for repeated funding raises concerns about its ongoing financial stability.

Time to Up the Forecast?

Lucid’s stock has fallen nearly 50% this year, as its revenue growth has stalled and losses have widened. Despite these challenges, Lucid continues to produce competitive cars. The company’s future hinges on the next five years, which will determine if its products can revive its stock value. Indeed, I think that’s going to be the key focus of most investors, who view Lucid’s end product as superior. Lucid’s various models have won a number of awards based on their performance, and from this perspective alone, I think there’s a lot to like about Lucid’s competitive niche in this space. 

That said, growth remains relatively stagnant overall. Revenues did increase by 45% year-over-year to $200 million in Q3. However, a rather small quarter-over-quarter growth rate and diminished investor expectations for future growth continue to hamper the stock.

If the company can find a way to ramp up production while holding costs steady, there’s hope for the company. Lucid’s operating losses have continued to widen (up to $770 million in Q3 from $687 two years ago), but the company is pursuing aggressive cost-cutting measures to bring these numbers in line. And, as mentioned, there’s a growth runway to 2026, so there’s some time here for the company to turn things around. The question is whether consumers will view Lucid’s excellent end product as a reason to buy more vehicles.

I think the company’s saving grace could be that its target customer isn’t someone who’s necessarily worried about auto loan rates right now. The premium end of the EV market could do well, if traditional luxury auto buyers look toward getting the latest and greatest EV. If that’s the case, there’s a bull thesis that could certainly play out in support of smaller losses in 2025, and a pathway toward profitability over the next two to three years. That could be enough to result in a meaningful valuation increase over time.

What Now?

I still think Lucid is risky, I’m not going to sugar coat things. The company’s financials are pretty much all pointing in the wrong direction, and aside from the Saudis who feel comfortable with putting more money into play to see if this thing can turn around, most investors may not be able or willing to wait long enough to see the kinds of returns many initially expected from this company. 

That said, I do think there’s a deep value argument for a company that could become a growth stock over time that may be worth exploring. If Lucid’s overall business model thrives in a world of removed EV tax credits, and consumers look for a Tesla alternative in the luxury EV space, it could be race on. This is one of those asymmetric bets that may be worth making for those with the capital and risk tolerance to do so.

It’s not a bet I would make, but I thought explaining the potential bull case behind this stock might be helpful. We’ll see how the competitive landscape in the EV sector plays out. But this is one top EV maker I’ll be watching closely, for sure.

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