Lucid Group's (LCID -0.47%) stock tumbled 13% during after-hours trading on Aug. 3 following its second-quarter earnings report. The luxury electric-vehicle (EV) maker generated $97.3 million in revenue, which represented a big jump from $174,000 a year ago (when it hadn't started shipping its vehicles) but broadly missed analysts' expectations by $59.8 million.

Lucid only delivered 679 vehicles during the quarter and produced 1,405 vehicles in the first half of 2022. It also halved its full-year production forecast from 12,000 to 14,000 EVs to 6,000 to 7,000. That marked the second time Lucid cut its production forecast; during its investor presentation in July 2021, it claimed it could deliver 20,000 vehicles in 2022.

Lucid's Air sedan.

The Lucid Air sedan. Image source: Lucid.

Lucid's net loss more than doubled year over year from $261.7 million to $555.3 million, or $0.33 per share, but still topped the consensus forecast by $0.08. Is Lucid's stock still worth buying after that messy quarter? Let's review the company's challenges, expectations, and valuations to decide.

Reservations are still rising

CEO and chief technical officer Peter Rawlinson attributed the EV maker's sluggish production during the quarter to supply chain and logistics challenges. But Rawlinson said Lucid had "identified the primary bottlenecks" and was restructuring its operations to tackle those issues.

On the positive side, Lucid's total reservations surpassed 37,000 by the end of the second quarter, compared to 30,000 reservations in the first quarter, 17,000 last November, and 13,000 last September. That total also doesn't include the Saudi Arabian government's recent agreement to buy up to 100,000 of Lucid's vehicles on an incremental basis.

There's clearly a fertile market for Lucid's high-end EVs, but the company desperately needs to ramp up its production to meet that rising demand.

What about its capacity and liquidity?

Lucid's AMP-1 factory in Arizona currently has an annual production capacity of 34,000 vehicles. Its Phase 2 expansion, currently underway, will increase its annual capacity to 90,000 by 2023.

By the second half of the decade, Lucid expects to expand its annual capacity to about 500,000 vehicles. These will consist of 350,000 vehicles from its Arizona plants and 150,000 from its forthcoming Saudi Arabian plants.

Lucid already has the capacity to fulfill most of its reservations, but the supply chain challenges should still throttle its near-term production. Therefore, investors will likely need to brace for at least a few more quarters of sluggish growth and widening losses.

The automaker ended the second quarter with $4.6 billion in cash, cash equivalents, and investments, which Chief Financial Officer Sherry House says will be "sufficient to fund the company well into 2023." Its manageable debt-to-equity ratio of 0.9 also gives it some breathing room to raise more cash with new debt offerings. 

But does Lucid's stock still deserve a premium valuation?

Lucid says its 37,000 reservations could generate $3.5 billion in potential sales if they are all delivered. But the company hasn't demonstrated it can hit that target yet, and the midpoint of its revised goal of 6,000 to 7,000 EVs would only translate to about $615 million in revenue this year.

Even after its post-earnings decline, Lucid still has a market cap of about $30 billion, nearly 50 times the revenue it might generate this year. The stock was already expensive prior to its latest earnings report, but its recent production cut caused its forward price-to-sales ratio to double.

Rivian Automotive (NASDAQ: RIVN), the electric truck maker that has manufactured over 5,000 vehicles to date and plans to produce 25,000 this year, trades at just 17 times this year's sales. Tesla (NASDAQ: TSLA), Lucid's closest direct competitor in the high-end electric sedan market, trades at 11 times this year's sales.

Based on those comparisons, it's tough to recommend buying Lucid. Its small size exposes it more heavily to supply chain headwinds than larger EV makers, and it's repeatedly disappointed investors with production cuts, delays, and recalls. It could eventually get its act together, but its stock is priced for perfection right now -- and it definitely isn't delivering perfect results to justify that premium.