Lucid Stock: New Pricing Model is Bullish

Lucid Group (LCID) is an EV manufacturer based in California. I am bullish on the stock.

Lucid is not a run-of-the-mill EV maker. The Lucid Air EV model is sleek, powerful, and luxurious. Besides, the company has a disruptive vision for the automotive industry, and LCID stockholders have to be willing to accept some risk and volatility.

Prospective investors must also consider that Lucid has a global vision.

Moreover, Lucid’s recently issued financial press release offers up not only some eye-opening results, but a new pricing model for Lucid’s EV model lineup. Some folks might like the pricing model and others won’t, but in the long term, it could help to boost Lucid’s top and bottom lines.

With that in mind, let’s give LCID stock a test drive and see what’s under the hood.

Another Pivotal Moment

LCID stock hasn’t exactly been on a tear lately. The stock’s 52-week high of $57.75 was achieved late last year, but recently the Lucid share price fell below the $20 mark.

Of course, it’s not a coincidence that LCID stock started to drop at the same time that the entire U.S. stock market began to slide lower. Just as a rising tide lifts all boats, a sinking tide can bring every ship down.

Still, there’s no denying that Lucid’s stockholders could really use a positive catalyst now. Fortunately for them, there is a catalyst and it comes in the form of a regional expansion in a place you might not have expected.

According to a fresh press release from Lucid, the Ministry of Finance of the government of Saudi Arabia has made a big-time purchase commitment for the Lucid Air, and future Lucid vehicle models.

Over a 10-year period, the Saudi Arabia government intends to purchase up to 100,000 Lucid vehicles. This is to include an initial purchase 50,000 vehicles, plus an option to buy up to an additional 50,000 vehicles. The vehicles will be not only Lucid Air models but presumably other future EV models as well, to be built and assembled at Lucid’s Arizona factory and the automaker’s future manufacturing facility in Saudi Arabia.

Lucid CEO Peter Rawlinson touted this value-added international deal, saying, “Delivering up to 100,000 Lucid electric vehicles in Saudi Arabia represents another pivotal moment in our acceleration of sustainable transportation worldwide.”

He’s 100% right about that, as this agreement will increase Lucid’s footprint as a global luxury EV manufacturer.

Newer, Higher Prices

Can higher vehicle prices lead to higher share prices? That’s the billion-dollar question that Lucid implicitly raised in the company’s recently issued Q1 2022 report.

The company’s bottom-line results are still a work in progress. Instead, focus on the company’s revenue generation, which is impressive for an up-and-coming automaker.

Specifically, Lucid achieved Q1 revenue of $57.7 million, and this result was driven by customer deliveries of 360 vehicles, according to the company. More revenue could come pouring in soon, as Lucid reported counting over 30,000 customer reservations, reflecting $2.9 billion in potential sales.

Rawlinson pointed out that these results were achieved “despite on-going global supply chain challenges,” so Lucid’s revenue and reservation totals are actually quite impressive given the difficult circumstances. \

Beyond those results, a different news item from Lucid’s report is generating a whole lot of buzz on Wall Street.

Rawlinson stated that Lucid is increasing the prices of its vehicles, starting in the beginning of June. He reassured, however, to “existing reservation holders that we will be honoring current pricing for them as well as for any new reservations made before the end of the month.”

Here’s the rundown: Starting June 1, new vehicle reservations will be priced in the U.S. at $154,000 for Air Grand Touring, $107,400 for Air Touring, and $87,400 for Air Pure. However, the Lucid Air Grand Touring Performance model will remain priced in the U.S. at $179,000.

In a time of high inflation, luxury-focused EV buyers should understand why Lucid is raising some of its vehicle prices.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, LCID is a Moderate Buy, based on three Buys and one Sell rating. The average Lucid price target is $40.50, implying 114.9% upside potential.

Takeaway

Lucid’s foray into Saudi Arabia’s EV market could provide a rich source of revenue for the company. Furthermore, higher vehicle prices in the U.S. should be accepted quickly by the customers due to the impact of dollar inflation.

Lucid is demonstrating that it’s still capable of generating decent revenue for a relatively small automaker. Overall, therefore, the rewards are likely to outweigh the risks when it comes to LCID stock.

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