Lucid Group Faces Downgrade as Analyst Cites Looming Dilution on the Horizon

Exane BNP Paribas's James Picariello downgraded their rating on Lucid Group (NASDAQ: LCID) from Hold to Sell on 2023/08/11. The analyst also lowered their price target by 23.1% from $6.5 to $5.

Following the release of Lucid Group's Q2 2023 print, released on 2023/08/07, Picariello cited the "looming dilution on the horizon" for the downgrade.

For Q2 2023, Lucid reported a loss per share of $0.40, which missed the Zacks Consensus Estimate of $(0.35) and, by 21.2%, Q2 2022’s $(0.33). However, the company's revenue of $150.87M beat Q2 2022’s $97.34M by 55%, although it fell short of the Zacks Consensus Estimate by 25.29%. Notably, management did not provide financial guidance in its press release or earnings call.

In response to the quarterly results, Lucid's Chief Technology Officer & CEO Peter Rawlinson stated, "We're on track toward achieving our 2023 production target of more than 10,000 vehicles, but we recognize we still have work to do to grow our customer base. During our Q2, we achieved several major milestones, including signing agreements to enter into a long-term strategic partnership with Aston Martin. Following a competitive process, their investment validates our award-winning technology and marks the first partnership for Lucid Group's technology arm. We look forward to exciting new products in 2H of this year, including the planned start of production of the Lucid Air Sapphire and the Lucid Air Pure Rear Wheel Drive, plus the highly anticipated unveiling of our new SUV, Lucid Gravity, forthcoming in November."

Despite these developments, 66.7% of analysts either recommend or strongly recommend selling the stock, while 33.3% rate LCID as a Strong Buy or Buy. Interestingly, no analysts see it as a Hold.

Since Lucid's latest quarterly report on 2023/08/07, the stock price has increased by 3.6%. However, when considering the year-over-year performance, the stock has declined by 63.3%. During this period, LCID has underperformed the S&P 500, which is down 6.1%.

James Picariello, the Exane BNP Paribas analyst who downgraded Lucid Group, is ranked in the top 4% out of 4,296 Wall Street analysts by WallStreetZen. With an average return of 44.2% and a 66.7% win rate, Picariello specializes in the Industrials and Consumer Cyclical sectors.

Lucid Group Incorporated, headquartered in Newark, CA, is a manufacturer of electric vehicles, EV powertrains, and battery systems. The company was founded in 2007.

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