Lucid (LCID) stock price forecast: EV demand has ‘died’

By: Invezz
lucid shares sink on weak quarterly deliveries

Lucid (NASDAQ: LCID) stock price has moved sideways this month as concerns about the EV industry have risen. The stock was trading at $3.65, which is much higher than last month’s low of $2.52. Like other EV stocks, Lucid Group shares have plunged by double-digits from their all-time highs. 

Lucid cuts prices again

Lucid Motors shares reacted mildly to news that the company was slashing prices for the second straight month. It has joined other EV companies like Tesla, Fisker, and Rivian that have cut prices in the past few months. It slashed the price of the Air Sedan by 10% to $69,900.

Companies cut prices to boost demand from their customers. Also, the law of supply and demand is that a company will likely not cut prices if there is a strong demand. Therefore, in Lucid’s case, cutting prices for the second straight month is a sign that the initial price cut did not lead to substantial demand as it expected.

There is a significant risk for these price cuts. For one, many people interested in Lucid vehicles may decide to wait for another potential price cut. Those who bought the Air Sedan two months ago spent 10% more. As such, perhaps, waiting for a while longer can lead to more savings.

The other unintended consequence for these price cuts is that the vital used car market industry is slowing. In most cases, used car prices will always retreat at a faster pace when new prices are in a downward trend. This is an important market because people use it to estimate their net worth and also apply for financing.

Most importantly, for Lucid Motors, the price cuts and falling demand mean that the company will take longer to become profitable. The most recent results showed that Lucid’s revenue came in at $137.8 million in Q3, a 9% increase from the same quarter in 2022. Its cost of revenue was over $469.7 million. These cuts will likely hit the company’s margins this year and prolong the path to profitability.

Lucid stock price forecast

LCID chart by TradingView

The daily chart shows that the LCID share price has done relatively well in the past few weeks. However, a closer inspection shows that it has formed what looks like a rising wedge pattern. In price action analysis, this pattern is one of the most bearish signs.

The stock has also remained below the 50-day and 100-day Exponential Moving Averages (EMA). Therefore, the path of the least resistance for the stock is downwards, with the next target to watch being at $2.56, its lowest point in January.

The post Lucid (LCID) stock price forecast: EV demand has ‘died’ appeared first on Invezz

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