‘Sit This One Out,’ Says Analyst About Lucid Stock

Lucid Group (NASDAQ:LCID) stock presents investors with a conundrum. On one hand, it is a state-of-the-art, award-winning EV company boasting industry-leading technology and strong access to capital, significantly backed by PIF – the sovereign wealth fund of Saudi Arabia – which holds a ~60% stake in the company. Conversely, it is an automaker whose debut vehicle fell short of initial sales expectations, contributing to a $10 billion free cash flow burn between 2022 and 2024.

That said, Cowen analyst Itay Michaeli argues that the newly launched Lucid Gravity SUV gives the company a “second chance” to achieve real commercial success – this time in a larger, more in-demand market segment.

The bulls, says Michaeli, believe the company can capitalize on its strong technological nous, the lessons learned from past challenges, and its shareholder backing to “reboot the growth story.” This begins with the launch of the Gravity SUV, followed by premium SUVs in late 2026. In the interim, bulls will stay hopeful about the prospect Lucid can monetize its tech expertise through potentially lucrative EV licensing agreements.

“With the company’s liquidity runway looking intact into H2 2026, Lucid has a reasonable runway to achieve these milestones,” the analyst opined.

The bear camp, however, views the earnings model as one where positive free cash flow isn’t expected until later in the decade, and is doubtful about the success of the Gravity SUV. Additionally, the company is undergoing a CEO transition following the unexpected departure of former CEO/CTO Peter Rawlinson.

So, that’s the view from both parties, but where does Michaeli stand?

“We have mixed views on the name,” the analyst says. While the Gravity launch could be a “turning point,” the starting price (~$95k) seems too high to drive a significant volume ramp, with Michaeli noting that he would have preferred a lower trim, higher-volume strategy, even if it meant sacrificing some gross margin. “If Gravity doesn’t demonstrate early volume momentum, the stock will likely struggle to work,” he says.

However, the analyst is more positive about the licensing potential, as the gap in EV technology between Lucid and traditional automakers has only grown, with management making confident noises about this opportunity during the Q4 call.

“Still,” Michaeli goes on to say, “it’s tough to bank an entire thesis on a licensing outcome, plus it’s unclear how attractive the terms would be for Lucid given the company’s funding needs. Lastly, the CEO transition creates some near-term uncertainty, though we were encouraged by some of the initiatives discussed by Lucid’s new management team on the Q4 call—namely more aggressive marketing.”

Given that the risk/reward profile “looks balanced right now,” Michaeli takes a neutral stance on LCID, rating the stock as a Hold. His price target of $2.30 suggests a 10% upside from current levels. (To watch Michaeli’s track record, click here)

Turning to the broader Wall Street sentiment, 10 recent analyst reviews paint a cautious picture: 1 Buy, 5 Holds, and 4 Sells, culminating in a Moderate Sell consensus. However, with an average price target of $2.38, LCID stock still holds ~14% upside potential. (See LCID stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.