It's difficult to buy great growth stocks at a discount. That's especially true when the market already expects rapid growth to occur in the near future. But Lucid Group (LCID 4.49%) shares could be an exception to the rule.
Over the next 12 months, analysts expect Lucid's revenue to grow by nearly 100%. Yet due to some short-term challenges, shares have lost nearly 30% of their value since the year began, pushing the stock to its lowest levels in years according to many valuation metrics.
Could this be the giant buying opportunity you've been waiting for? The answer is likely yes. But there's a catch.
NASDAQ: LCID
Key Data Points
This is why Lucid stock is so cheap
Lucid isn't alone in its struggles this year. Nearly every other electric vehicle (EV) maker has seen its valuation shrink. Even Tesla, the largest and best capitalized competitor with nearly $100 billion in annual sales, has seen its valuation collapse by nearly 50%. What's going on?
Last year, EV sales grew healthily in the U.S., but were below expectations. While Tesla bucked the trend, most EV makers like Lucid saw their stock prices struggle mightily during certain periods of 2024. This year was expected to see a rebound, but talk about repealing EV subsidies has created a lot of uncertainty about demand. And if there's anything we know about the stock market, it's that markets generally dislike uncertainty, often assigning lower valuations for companies with uncertain futures.
But there's another reason why Lucid's stock is so cheap. On Feb. 25, its longtime CEO stepped down after 12 years on the job. The departure rattled investors, sending shares on a multi-week slide. Perhaps the CEO was simply retiring after a long career. But the move was largely considered abrupt, casting yet more uncertainty on the company's future.
There's no doubt the EV demand forecasts remain uncertain right now, and the recent CEO departure complicates the situation even further. But there are two reasons why shares might be a buy today at their discounted valuation.
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Two reasons to buy this EV stock today
The uncertainty surrounding Lucid stock is happening during what should be a very exciting period for the company. That's because earlier this year, the company began shipments on its Gravity SUV platform. This doubles Lucid's lineup, akin to Tesla adding the Model X to its lineup alongside the Model S. The sales potential for the Gravity model is largely fueling analyst expectations for 94% sales growth in 2025. It's not often you see a stock's valuation shrink heavily right before one of the biggest growth inflection points in its history.
But there's another reason to buy Lucid shares apart from this year's sales growth potential. And that's next year's sales potential. In 2026, the company expects to begin launching several new mass market vehicles with price points under $50,000. This would unlock millions of new potential buyers, just like what Tesla achieved when it launched its affordable Model Y and Model 3 vehicles. If Tesla's historical sales trajectory is any indication, Lucid could keep its rapid sales growth pace sustained for several more years if these vehicles do in fact reach the market in 2026.
Despite management guidance, I am skeptical that Lucid can bring these vehicles to market by the end of next year. While it does seem to have enough capital runway to last through 2026, it will likely need to raise even more money to scale production of these vehicles. And with its gross margin still in the negatives, the company will likely be reliant on outside investors through that launch period. The CEO departure adds even more uncertainty to this projected timeline.
Is Lucid stock a buy right now? Possibly, but only for patient and aggressive growth investors. The projected growth this year is far from guaranteed. And the potential growth in 2026 is even less certain. For those looking to snap up a potential high-growth stock at a historical discount, however, Lucid shares could be for you.
