$LCID An Underrated EV PlayerAfter disappointing Q2 production and delivery numbers, Lucid Group, Inc. (NASDAQ: LCID) stock dropped 12% – ending the stock’s impressive 22% run on the news of its new deal with Aston Martin (LSE: ALM) for the latter to use some of LCID’s technology. Despite announcing underwhelming numbers, the drop in the LCID stock price could be an overreaction as the company’s fortunes could improve significantly when its Saudi Arabia plant starts delivering vehicles next September. Given the significance of this catalyst, the current dip could be an opportunity to go long on the stock ahead of this upcoming catalyst.
LCID Fundamentals
LCID’s Production & Deliveries
LCID announced that it produced 2,173 vehicles, a decline of 6% sequentially, which means LCID has produced 4,487 vehicles so far in 2023. While the production number may seem low, it is still in line with LCID’s forecast of 10,000 in 2023. That said, LCID has missed on its target to increase its deliveries sequentially since it delivered 1,404 vehicles down from the 1,406 it delivered in Q1.
The Saudi Arabia Plant
Nevertheless, the underwhelming performance regarding production and deliveries may end soon since the first vehicle assembled in the Saudi Arabia plant is expected to roll out in September 2023. The new assembly line has the potential to improve LCID’s production and deliveries for the rest of the year and the coming years which in turn will increase its revenues and improve its fortunes substantially.
Furthermore, the plant will start full production in 2025 according to LCID, and is expected to produce 155,000 vehicles annually and export more than 130,000 vehicles to countries in the Middle East region. With this, LCID will be one of the first EV manufacturers to enter the Middle Eastern EV market which is expected to reach $7.65 billion by 2026 according to a report by Mordor Intelligence, allowing it to build brand loyalty and set regional industry standards.
Technical Analysis
After it successfully tested the $7.11 support, LCID stock entered a neutral trend with the stock trading in a sideways channel between $7.11 and $7.98. Looking at the indicators, the stock is trading below the 50, and 21 MAs which is a bearish indication although it remains above the 200 MA which is a bullish indication. Meanwhile, the RSI is neutral at 37 and the MACD is approaching a bullish crossover.
As for the fundamentals, LCID stock has witnessed a catalyst after the announcement of its Q2 production and deliveries update. LCID’s Q2 earnings on August 7 and the start of the assembly process in the Saudi Arabia plant will be future catalysts for LCID stock. With the stock trading near support, investors could find the current PPS a good entry point ahead of deliveries starting from the Saudi plant.
LCID Forecast
While LCID had disappointing Q2 production and deliveries, it is still on track to achieve its guidance for the year, especially since the Saudi plant will start the assembly process in September which will increase LCID’s production and deliveries. Furthermore, LCID has started using its vehicle powertrain and battery systems technology to make more revenue with the new deal with Aston Martin. With the backing of the PIF, LCID can dominate the Middle Eastern market which makes LCID stock one worth keeping an eye on.
