What happened

After jumping a staggering 71% in January, Lucid Group (LCID -1.39%) stock cooled down last month and shed 21.9% of its value, according to data provided by S&P Global Market Intelligence. The stock is already down another 9% so far in March, as of this writing.

If a rebound in growth stocks and rumors of a buyout sent Lucid stock skyrocketing earlier in the year, a dismal fourth quarter and a woeful outlook for 2023 followed by a barrage of analyst downgrades wiped out investor interest in the electric vehicle (EV) stock in February.

So what

Lucid generated $608.2 million in revenue in 2022. That's not too shabby considering that 2022 was also Lucid's first full production year, but the EV maker could have churned out a much bigger number had it produced 20,000 cars in the year as it originally projected. Lucid eventually produced only 7,180 vehicles in 2022.

Here's what miffed investors most: Lucid says it is focused on ramping up production and its production in Q4 jumped 53% sequentially. Yet, it still expects to produce only 10,000 to 14,000 EVs in 2023.

So not only has Lucid's production guidance disappointed the market, but the company's falling reservation count has raised serious concerns about the demand for its EVs. As of Feb. 21, the company had around 28,000 reservations. That's an almost 18% drop in reservations in just three months. Lucid is evidently facing two problems: cancellation of reservations and fewer new orders because of long wait times.

To top that, Lucid said it ended 2022 with only $1.7 billion in cash and equivalents versus $6.3 billion as of the end of 2021.

So here's what investors in Lucid realized in February: The EV maker is struggling with production, not getting too many orders, and rapidly burning cash, all while competition in the EV market gets even hotter.

It was, therefore, not surprising to see Lucid stock plunge after its earnings release and several analysts turn cautious about the stock.

Now what

Lucid needs a lot of cash and discipline right now and must boost production and deliveries if it wants to attract buyers to its EVs. Funnily enough, Lucid's management seems to be less interested in production this year and more focused on sales and marketing.

How does Lucid expect to boost sales if it isn't producing enough cars? How will it attract new orders if it can't fulfill existing orders? Where will Lucid get all the money that it wants to spend on marketing while ramping up production?

These are just some of the burning questions that Lucid investors have right now. Some investors may even secretly be hoping the rumor of Lucid being acquired comes true: A blog recently claimed that Saudi Arabia's Public Investment Fund, which is already a major stakeholder in Lucid, is reportedly trying to buy Lucid and take it private.