Lucid stock continues to climb as the electric vehicle (EV) sector gains momentum, with investors shrugging off a recent downgrade from Citigroup (Citi). The surge in Lucid Group Inc.’s stock price comes amid a broad rally in EV stocks, distracting investors from the negative analyst note.
Lucid’s stock has risen by 31.1% over a six-day winning streak, marking its longest winning streak since the company merged with a special-purpose acquisition company (SPAC). These gains also represent the best six-day performance since January 2023, when the stock saw a 36.1% jump.
Citi Research analyst Itay Michaeli resumed coverage of Lucid’s stock with a neutral rating and a $8 stock price target. Previously, Michaeli had rated the stock as a buy with an $11.50 price target. While Michaeli remains positive on Lucid’s technology relative to its competitors, there are concerns about the company’s near-term demand for the Lucid Air EV and its gross margin performance.
Despite the downgrade, Lucid’s stock rallied due to positive delivery and production data from other EV makers. Companies like Tesla, NIO, and Rivian reported upbeat data, leading to increases in their stock prices. Tesla saw a 6.8% rise, NIO increased by 1.7%, and Rivian soared by 11.3%.
Michaeli wrote in a note to clients that although their latest data checks weren’t discouraging, they didn’t provide enough conviction to support an optimistic outlook. Michaeli highlighted the risks to Lucid’s gross margin outlook, including recent price cuts by rival EV manufacturers and the timeframe until the company’s new Gravity SUV arrives in 2024. Michaeli is waiting for signs of strong demand and brand momentum for the Lucid Air, as well as greater visibility regarding the Gravity SUV launch.
Over the past three months, Lucid’s stock has experienced a 9.3% decrease. In contrast, the Global X Autonomous and Electric Vehicles exchange-traded fund has rallied by 11.2%, and the S&P 500 index has gained 7.8%.
As Lucid Group Inc. continues its winning streak, investors are looking for signs of sustained demand and improved gross margins. The EV sector’s overall rally has helped divert attention from the Citi downgrade, but uncertainties remain regarding Lucid’s performance in the near future.
