Why Lucid Stock Is Sinking Today

Lucid (NASDAQ: LCID) stock is losing ground in Wednesday's trading. The company's share price was down 6% as of 2:30 p.m. ET and had been down as much as 10.2% earlier in the day's trading.

Lucid stock is falling due to catalysts related to the results of the U.S. presidential election. With Donald Trump's win, investors think that the incoming administration could bring negative catalysts for the electric vehicle (EV) industry.

Lucid stock falls in response to Trump's election win

With Trump set to return to the White House in January, some significant policy shifts are on the horizon, and the change in administration could create headwinds for players the EV market.

Some investors expect that the Trump administration will do away with incentives and tax rebates that have helped promote EV purchases. If that happens, that could hurt demand for Lucid's vehicles.

Additionally, it could make it harder for smaller players to compete against Tesla and gain market share in the space. While Lucid is seeing big sell-offs today, Tesla stock is surging. The EV leader's share price was up 14.1% as of this writing.

What's next for Lucid?

Lucid is scheduled to publish its third-quarter results and host a conference call after the market closes tomorrow. While sales and earnings have yet to be reported, the company has already shared its vehicle production and delivery numbers for the period. The EV specialist produced 1,805 vehicles and delivered 2,781 vehicles in the quarter.

Lucid's long-term outlook hinges on whether it can increase production and demand to the point where it sees strong benefits from economies of scale. Right now, the business is burning through cash. Last quarter, it posted a net loss of roughly $643.4 million on sales of roughly $200.6 million.

On the plus side, Lucid has strong financial backing from Saudi Arabia's Public Investment Fund, and the company recently announced new stock sales. The company has sufficient funding and should be able to secure new capital through additional stock sales, but a potential shift into profitability for the business could be a long way out.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.