CFRA Maintains Strong Sell on Lucid Group, Lowers Price Target to $1 Amid High Cash Burn

CFRA analyst Garrett Nelson reiterated a Strong Sell rating and set a $1 price target for Lucid Group (NASDAQ:LCID) following the company’s latest delivery report. The analysts adjusted the 2024 EPS estimate slightly higher to -$1.33 from -$1.35, while keeping the 2025 estimate unchanged at -$1.25.

Lucid reported Q2 vehicle production and deliveries at 2,110 units and 2,394 units, respectively, which were slightly ahead of estimates of 2,100 units. Although these figures represent a record high for quarterly shipments, the analysts believe the company is still far from achieving the necessary scale to reduce unit costs sustainably.

Lucid's high cash burn rate remains a concern, averaging about $700 million per quarter. At the end of Q1/24, the company had $4.0 billion in cash and equivalents and $2.4 billion in total debt. Despite significant price cuts, demand for the Lucid Air remains weak, leading to unsustainably high unit costs, with a COGS of $206,000 per vehicle delivered in Q1. Therefore, CFRA continues to view Lucid Group's financial position and market performance negatively, reaffirming the Strong Sell rating. Lucid is expected to report earnings on August 5.