Lucid Investors Get Hit With Double Whammy

Lucid Group (NASDAQ: LCID) has had quite a roller-coaster ride through its limited history. It started out producing a high-quality sedan electric vehicle (EV) but continuously disappointed investors with production hiccups and disappointing deliveries. That's changed recently, and Lucid has been gaining momentum while rivals such as Rivian Automotive (NASDAQ: RIVN) deal with production snags of their own.

Let's take a look at the shifting momentum and two things that could make the company hit a speed bump.

Momentum

About a year ago, Rivian arguably had more momentum than any EV maker, while Lucid continued to disappoint investors. But through 2024, the momentum slowly shifted in Lucid's favor as Rivian's deliveries stalled and Lucid started posting quarterly records.

More specifically, Rivian posted a 36% decline in deliveries during the third quarter and cut production guidance from 57,000 vehicles down to 47,000 to 49,000 vehicles. Meanwhile, Lucid posted a 91% gain in third-quarter deliveries -- aided by some hefty incentives -- which marked the third straight quarter of record-setting delivery numbers for the EV maker.

While the shift in momentum is good news for Lucid investors, a couple of things have slowed that momentum recently.

Speed bumps

The first speed bump came in the form of Lucid announcing it expects a larger-than-anticipated Q3 loss. Lucid warned investors that it now expects a third-quarter operating loss between $765 million and $790 million, which is more than the $752 million loss expected by analysts, per FactSet.

The second speed bump comes in the form of further shareholder dilution. Lucid announced plans to sell more than 260 million shares in a public offering. If the public offering is completed, it will sell nearly 375 million shares to its majority shareholder, Saudi Arabia's Public Investment Fund (PIF). You can see the previous levels of shareholder dilution below.

LCID Shares Outstanding data by YCharts.

What it all means

While the shareholder dilution and a larger-than-expected Q3 loss on deck drove the stock price down nearly 27% over the past month, long-term shareholders can take these speed bumps with a grain of salt. We knew Lucid was posting massive losses, and we knew it was going to need to raise capital at some point. Establishing a young company in the automotive world is an expensive and challenging process.

What long-term investors should focus on is how the company executes the upcoming Gravity SUV EV launch, and how its initial production and deliveries ramp up over the next few months. The Gravity SUV is also just the next step. The EV maker plans to launch a midsize crossover, priced below $50,000 before shipping, in roughly two years.

These two speed bumps also serve as a reminder to investors that Lucid is a highly speculative and volatile stock, with sizable stock price swings, and should remain a smaller position in your portfolio.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.