Lucid Group (NASDAQ:LCID) stock hasn’t been in the fast lane during the past year. However, now you can ride along as Lucid strikes a deal with luxury car manufacturer Aston Martin, which should benefit both companies. I am bullish on LCID stock because a turnaround looks overdue, and Lucid Group finally has a catalyst that might send the share price higher.
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California-headquartered Lucid Group makes electric vehicles (EVs) that discerning drivers might call luxurious. So, it only makes sense that Lucid would choose to partner with another high-end automaker.
However, hardly anyone could have anticipated that Lucid Group with collaborate with a carmaker in the United Kingdom. Still, it makes perfect sense since automakers around the world are looking to electrify their vehicles — and if any EV startup can help out right now, it’s Lucid Group.
LCID Stock Jumps on News of Aston Martin Partnership
You know those flashy, ultra-fast cars that movie hero James Bond drives? Those cars are legendary, and they’re manufactured by British automaker Aston Martin. Of course, Bond insists on the ultimate luxury driving experience, so Aston Martin’s cars appeal to high-end buyers.
Meanwhile, Lucid Group has evidently had international ambitions for a while now. In particular, Lucid seeks to make a move into China’s potentially lucrative EV market. That’s a bold plan for a company with an $11 billion market cap, but then, Lucid Group’s management apparently isn’t afraid to delve into new fields and geographies.
Nevertheless, it’s surprising to learn about Lucid Group’s new partnership with Aston Martin. At the very least, it looks like the market was pleasantly surprised, as LCID stock jumped by as much as 15% this morning (before pulling back), and Aston Martin (GB:AML) stock leaped by a double-digit percentage as well. Clearly, financial traders envision both companies benefiting from this collaboration.
Lucid Group stock likely has plenty of room to run to the upside, as it was a $20 stock not very long ago (now near $5.60). Could today’s price action be the start of a multi-month rally? Let’s delve into the details of the headline-grabbing deal and decide whether LCID stock might shift into a higher gear this summer.
Lucid Group Could Gain $450 Million
It’s easy to figure out what Aston Martin will get out of this partnership. After a challenging 2022, Aston Martin is probably ready to try something new – specifically, joining the EV revolution. Yet, it’s not easy for an old automaker to venture into a modern trend. That’s where Lucid Group enters into the picture, as it will supply “state-of-the-art electric vehicle powertrain and battery systems” to Aston Martin.
Now, the surprising partnership is starting to make sense. Furthermore, Bloomberg made an astute observation – Lucid Group and Aston Martin are “both backed by Saudi Arabia’s sovereign wealth fund.” That’s likely not a coincidence.
What does Lucid Group stand to gain from this deal, though? The answer is cash and shares that collectively are worth hundreds of millions of dollars. According to a report from Reuters, Aston Martin “will make cash payments and issue 28.4 million new ordinary shares” to Lucid Group; these are “worth together about $232 million.”
I wouldn’t go so far as to call the $232 million worth of cash and Aston Martin shares a lifeline for Lucid Group. However, it’s a very welcome financial infusion for Lucid, no doubt. Maybe, Lucid Group can use this capital to shore up its balance sheet or to pursue its planned venture in China.
Is LCID Stock a Buy, According to Analysts?
Turning to Wall Street, LCID stock comes in as a Moderate Buy based on four Buys, two Holds, and one Sell rating assigned in the past three months. The average Lucid Group stock price target is $8.17, implying 44.7% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell LCID stock, the most accurate analyst covering the stock (on a one-year timeframe) is Adam Jonas of Morgan Stanley (NYSE:MS), with an average return of 51.85% per rating and a 100% success rate. Click on the image below to learn more.
Conclusion: Should You Consider LCID Stock?
Analysts aren’t full-on bullish about Lucid Group, but the collaboration with Aston Martin could change their minds. After all, $450 million in cash and Aston Martin shares could certainly change Lucid’s financials in the coming quarters.
I’ll admit LCID is still risky, as the company is a start-up business in a crowded EV field. Nevertheless, I feel it’s a good time to consider Lucid Group stock because there’s room for further upside in this share price rally, and the deal with Aston Martin looks like a win-win for practically everyone involved.
