Lucid (LCID +10.59%) stock got stuck in reverse Wednesday. The electric vehicle (EV) company's share price ended the daily trading session down 5.6%, according to data from S&P Global Market Intelligence.
NASDAQ: LCID
Key Data Points
While there wasn't any business-specific news pushing Lucid lower today, the company's valuation fell after high-profile earnings reports missed expectations. Yesterday, Alphabet and Tesla became the first two members of the "Magnificent Seven" to report quarterly earnings -- and Wall Street was not happy with the results. Tesla's report in particular may have some bearish implications for Lucid.
Is Tesla's Q2 report bad news for Lucid stock?
It was a volatile day for the stock market. Notably, Alphabet's second-quarter performance actually came in significantly above the market's expectations -- with $84.74 billion in sales and per-share earnings of $1.89. The results beat the average analyst estimate for sales of $84.29 billion and earnings of $1.85 per share, but investors flinched after the company guided for weaker operating income margins in the current quarter. The tech giant's stock ended the day down 5%
Tesla's report triggered an even bigger sell-off for the company's stock and also had much more direct implications for Lucid. The EV leader reported non-GAAP (adjusted) earnings per share of $0.52 and revenue of $25.5 billion in the quarter. Meanwhile, the average analyst estimate had called for the business to deliver adjusted earnings per share of $0.62 and sales of $24.74 billion. Tesla stock closed out Wednesday's trading down 12.3%.
There are signs Tesla is continuing to see relatively soft demand for its vehicles. If so, that's a bearish indicator for the overall EV market -- and Lucid in particular. Lucid's goal is to increase demand and production to the point where it sees enough benefits from economies of scale to generate profits, but it's been facing some significant demand headwinds lately.
What comes next for Lucid?
Lucid is scheduled to report its second-quarter results after the market closes on Aug. 5. The company has already announced that it delivered 2,394 vehicles and produced 2,110 vehicles in the period, but it remains to be seen how the company's top line and bottom line will fare.
With its first-quarter report, Lucid delivered 1,967 EVs and produced 1,728 vehicles. The company recorded sales of $172.7 million and posted a not less of $680.86 million. The company ended the quarter with cash and equivalents of $2.17 billion.
Lucid is posting big losses as it moves to ramp its business, but the company has recently indicated that its partnership with the Saudi Arabian Public Investment Fund (PIF) remains very strong. The PIF has been a regular source of funding for Lucid and is also the company's majority shareholder.
