Lucid Group (NASDAQ: LCID) stock tanked after Cantor Fitzgerald downgraded it, citing supply chain disruptions and market challenges.
Cantor Fitzgerald has downgraded its stance on Lucid (LCID) from Neutral to Underweight, slashing the price target from $6.00 to $4.00. This revision comes as Lucid faces a barrage of obstacles in the electric vehicle market, including soaring negative gross margins, a bleak annual production outlook, and dwindling demand.
The firm has also updated its revenue forecasts for fiscal years 2024 and 2025 to around $724.2 million and $1,651.2 million, respectively. This represents a substantial decline from previous estimates of $1,654.6 million for FY24 and $5,076.9 million for FY25. These adjustments reflect lowered expectations for vehicle production, deliveries, and anticipated average selling prices (ASPs).
Cantor Fitzgerald has significantly reduced Lucid’s vehicle production estimates, with only 9,500 units expected for 2024, down from the initial projection of 15,000 units. Similarly, they scaled back the forecast for 2025 to 20,000 vehicles from an initial estimate of about 38,000 units. To maintain competitiveness in the industry, Lucid has been reducing its vehicle prices, resulting in a new blended average selling price (ASP) estimate of around $88,000 for fiscal year 2024.
Cantor Fitzgerald arrived at a price target of $4 through a bottom-up 10-year discounted cash flow (DCF) analysis. This involved factoring in an 11% weighted average cost of capital (WACC) and a terminal value based on a 2% long-term growth rate. The firm has highlighted several key risks that could hinder Lucid’s performance, including ongoing supply chain disruptions, sluggish customer demand, manufacturing challenges, and fierce market competition.
Lucid (NASDAQ: LCID) Stock Reaction
LCID stock plummeted 16.76% to close at $3.08 on Thursday. The traders had exchanged hands with 70,519,405 (70.51 million) shares compared to the average daily trading volume of 40.14 million.
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