Electric vehicle (EV) maker Lucid Group, Inc. (LCID) recently announced the release of Lucid UX 2.0, its most extensive software update. The company’s continued software upgrades and investments should drive its long-term growth.

However, LCID is down 17.9% over the past month to close the last trading session at $12.78. It has lost 66.9% year-to-date and 48% over the past year.

An investor recently sued the company over allegations that its leaders falsely hyped its production timeline before and after it went public in 2021. The lawsuit claims that the stock’s prices were falsely elevated. This could make investors anxious, hurting its share price.

Here is what could shape LCID’s performance in the near term:

Bleak Bottom Line Performance

While LCID’s revenue increased substantially year-over-year to $97.34 million for the second quarter that ended June 30, 2022, its loss from operations came in at $559.20 million, up 124.7% year-over-year. Also, its net loss came in at $555.27 million, up 112.2% year-over-year.

Stretched Valuation

LCID’s forward EV/Sales of 25.33x is significantly higher than the industry average of 1.05x. Its forward Price/Sales of 27.95x compares to the industry average of 0.80x. Also, its forward Price/Book of 7.24x is 213.7% higher than the industry average of 2.31x.

Unfavorable EPS Estimates

LCID’s loss per share is expected to worsen 25.4% year-over-year to $0.30 for the third quarter ending September 2022. Its loss per share is expected to worsen 8.8% year-over-year to $0.32 for the quarter ending December 2022.

Also, its EPS is estimated to decrease by 69.4% per annum for the next five years. Moreover, LCID’s EPS is expected to remain negative in 2022 and 2023.

POWR Ratings Reflect Bleak Prospects

LCID has an overall rating of F, equating to a Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. LCID has an F grade for Value, in sync with its higher-than-industry valuation multiples.

It has an F grade for Quality. LCID’s trailing-12-month gross profit margin of negative 281.59% compare to the industry average of 36.42%.

In the 64-stock Auto & Vehicle Manufacturers industry, LCID is ranked #57. The industry is rated D.

Click here for the additional POWR Ratings for LCID (Growth, Momentum, Stability, and Sentiment).

View all the top stocks in the Auto & Vehicle Manufacturers industry here.

Bottom Line

LCID is not expected to turn profitable anytime soon. Moreover, the stock is trading near its 52-week low of $11.87, which it hit on October 14, 2022. Given the stock’s stretched valuation and grim outlook, the stock could be best avoided now.

How Does Lucid Group, Inc. (LCID) Stack Up Against its Peers?

While LCID has an overall POWR Rating of F, one might consider looking at its industry peers, Jardine Cycle & Carriage Limited (JCYGY), Subaru Corporation (FUJHY), and Stellantis N.V. (STLA), which have an overall A (Strong Buy) rating.

LCID shares were trading at $13.36 per share on Friday afternoon, up $0.76 (+6.03%). Year-to-date, LCID has declined -64.89%, versus a -20.19% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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