For three years, artificial intelligence (AI) has been the premier stock market catalyst. With a global addressable market of $15.7 trillion by the turn of the decade, based on estimates from PwC, it's not hard to understand why investors have gravitated to AI stocks.
However, AI isn't the only trend fueling the benchmark S&P 500 and growth-powered Nasdaq Composite to record highs. Excitement surrounding stock splits has played an important role in lifting the tide for Wall Street.
A stock split is an event that allows a publicly traded company to alter its share price and outstanding share count by the same factor. The beauty of splits is that they have no impact on a company's market cap, nor do they influence underlying operating performance in any way.
Image source: Getty Images.
Though a split can increase or decrease a company's share price, there's a wide variance of opinion as to how investors perceive these actions. For example, investors tend to flock to businesses announcing and completing forward splits, which reduce a company's share price and correspondingly raise its share count. Companies completing forward splits are often industry leaders and have historically outperformed the S&P 500 in the year following their announcement.
In comparison, reverse splits might as well be cordoned off with caution tape by the investing community. Reverse splits, which are designed to increase a company's share price, are usually undertaken by struggling businesses attempting to avoid delisting from a major stock exchange.
To date, three prominent non-tech companies have completed forward splits: O'Reilly Automotive, Fastenal, and Interactive Brokers Group. But Wall Street's hottest stock-split stock is the lone high-profile reverse split of 2025 -- and according to one analyst, its shares can catapult as much as 280% over the next year.
Will the hottest reverse stock split on Wall Street nearly quadruple in value?
Whereas satellite-radio monopoly Sirius XM Holdings was the lone big-name company to execute a reverse split in 2024, the glory in 2025 goes to electric-vehicle (EV) maker Lucid Group (LCID 2.75%).
Following the close of trading on Aug. 29, Lucid consolidated its more than 3 billion outstanding shares via a 1-for-10 reverse split, which shrunk its share count down to around 307 million. With its share price receiving a corresponding 10X boost, it was (initially) lifted to almost $20 from just below $2 prior to the opening bell on Sept. 2. Increasing its share price back above $5 should put it on the radar of more institutional investors.
NASDAQ: LCID
Key Data Points
But for Wall Street's biggest Lucid optimist, the party is just getting started. In July, Benchmark analyst Mickey Legg increased his (pre-split) price target on Lucid Group from $5 to $7. Adjusted for the company's reverse split, Legg's $70 target implies up to 280% upside from where shares ended the session on Sept. 5.
Legg's Street-high price target followed news on July 17 that Lucid had formed a partnership with ride-share colossus Uber Technologies (UBER 0.18%) and privately held autonomous-vehicle systems developer Nuro. This agreement will see Uber deploy 20,000 (or more) Lucid Gravity SUVs using Nuro's Level 4 autonomy system over a six-year period, with the first launch expected in the latter-half of 2026.
In addition to increased visibility for Lucid and entrance in the lucrative robotaxi market, Uber made a $300 million investment into Lucid Group stock, which closed on Sept. 4. Even though Lucid has received billions of dollars in backing from Saudia Arabia's Public Investment Fund, $300 million isn't chump change and supports Lucid's efforts to expand its manufacturing operations and ramp production.
With deliveries of Gravity commencing, Lucid sporting plenty of cash in its coffers, and the company snagging Uber as a partner, it would appear to be all systems go for Lucid stock -- but looks can be deceiving.
Image source: Lucid.
Lucid Group might stall out before it has an opportunity to shift into a higher gear
On the surface, a six-year agreement with Uber and newfound capital sounds great. But dig beneath the headlines and you'll discover that this story stock has failed to deliver on more than one occasion.
The first big whiff came from the company's flagship premium sedan, Lucid Air. With Tesla effectively stepping away from its higher-priced Model S to focus on mass-producing the more-affordable Model 3 sedan, the path was laid for Lucid to completely dominate the luxury EV market. Unfortunately, Lucid Air sales have disappointed in a big way.
Some of this blame can be affixed to macro issues affecting the EV arena. Specifically, we witnessed consumer interest in EVs weaken in recent quarters. This may have to do with President Donald Trump's "Big, Beautiful Bill" eliminating automotive regulatory credits by the end of September, or could reflect a lack of available EV charging infrastructure.
However, Lucid's management team also deserves a good chunk of the blame. When Lucid made its debut on the Nasdaq by merging with a special purpose acquisition company (SPAC) in July 2021, it was forecasting the delivery of 90,000 units by 2024. When 2024 arrived, the company had lowered its output projection to 9,000 EVs.
On top of its numerous issues scaling production, its Gravity SUV was expected to hit showrooms in 2024, but was eventually pushed back to 2025. Not only did Lucid Air fail to win over luxury EV buyers, but the company stumbled when introducing its more practical SUV.
To make matters worse, management again stumbled with its production ramp this year. After initially forecasting production of 20,000 EVs, its updated forecast calls for 18,000 to 20,000 units.
Lucid has been losing a staggering amount of money each year. LCID Net Income (Annual) data by YCharts.
Despite ending June with $4.86 billion in total liquidity, Lucid has burned $1.26 billion in cash from its operations through just the first six months of the year, and racked up a $13.8 billion accumulated deficit (i.e., loss since inception).
Lucid Group has consistently failed when given the chance to show it can scale and deliver on modest growth expectations. It's possible the company completely stalls out before ever having a chance to shift production into a higher gear.
