Lucid Motors Stock Price Forecast October 2021 – Time to Buy LCID Stock?

Lucid Motors (LCID) stock rose 31% yesterday and was trading higher in premarkets today also. While the stock is still way below the pre-merger highs, it has risen sharply since the merger.

Lucid Motors’ merger with Churchill Capital IV (CCIV) was arguably the most hyped SPAC merger of 2021. However, the pre-merger euphoria died down after the company officially announced the deal. What’s the forecast for LCID stock as it begins deliveries?

Lucid Motors recent developments

Yesterday, Lucid Motors confirmed that the deliveries of its Lucid Air Dream would begin as scheduled and the first deliveries would be made on Saturday. The Dream model is a premium version of the sedan and would be priced at $169,200. The entry-level model would start at $77,400. The Dream model would have an EPA range of 520 miles which is higher than what Tesla offers.

Lucid Air would compete with Tesla Model S. Earlier this year, Tesla begin the deliveries of the Model S Plaid. However, the company backed out of Model S Plaid+ which would have had a higher range.

Meanwhile, it might appear surprising that Lucid Motors stock surged almost a third after announcing that it would make deliveries as planned. However, it goes to show the emphasis that markets have placed on execution. In the startup EV (electric vehicle) ecosystem, several companies including Lordstown Motors and Nikola have faltered on execution. The stocks have been under pressure as markets are apprehensive about their production plans.

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Is LCID the next Tesla?

Incidentally, both Nikola and Lordstown were accused of fraud by Hindenburg Research. Both the companies saw the exits of their top management after the allegations. Lucid Motors, which is led by a former Tesla engineer Peter Rawlinson, has managed to build its reputation as the “next Tesla.”

From building its own cars to choosing a premium car as the first model, there are several similarities between the two companies. One notable exception is the approach towards the charging networks. While Tesla has invested in its own network of Superchargers, Lucid Motors has tied up with Electrify America for the charging network.

Lucid Motors stock forecast

Four analysts are currently covering LCID stock. Three of them rate the stock as a buy or some equivalent while one has a sell rating. The stock has a median target price of $28 which is a 21% discount over current prices. After the recent spike, the stock even trades 15% above the street high target price.

Last month Bank of America analyst John Murphy initiated coverage of Lucid Motors with a buy rating, and termed the company “the Tesla/Ferrari of new EV automakers.” He added, “Our Buy rating on Lucid Group is predicated on our view that the company is one of the most legitimate among the universe of start-up electric vehicle (EV) automakers and also a relative competitive threat to the universe of incumbent automakers.”

Given the similarities between Tesla and Lucid Motors, many analysts see the company as the “next-Tesla.” LCID itself has been comparing itself to Tesla and Rawlinson sees the EV industry as a two-horse race between itself and Tesla.

Meanwhile, Morgan Stanley, which is among the biggest Tesla bull, is bearish on Lucid Motors stock.

LCID stock long term forecast

The long-term forecast for LCID stock looks positive looking at the pivot towards electric cars. The company has positioned itself as a “post luxury” automaker and forecasts that the global luxury car market would rise at a CAGR of 5% between 2018 and 2026 and reach $733 billion. By 2030, the company expects to produce over 500,000 cars and capture 4% market of the estimated 15 million expected global unit sales that year.

It expects to deliver 20,000 cars in 2022 which it expects to rise gradually and reach 135,000 cars by 2025. It expects to become EBITDA positive by 2024 and is forecasting an adjusted EBITDA of $592 million that year.

Meanwhile, Tesla delivered almost half a million cars in 2020 and its annual run rate is now nearing 1 million cars. That’s a big milestone for the Elon Musk-run company as it delivered its millionth car last year only.

Should you buy Lucid Motors stock?

Lucid Motors stock looks like an exciting investment opportunity as I’ve noted previously. It has managed to build a strong brand and looks like a legitimate contender for the “next Tesla.” While a lot of EV companies and models were christened as “next Tesla” and “Tesla killers” none of them lived up to the hype.

With Tesla now commanding a market cap of $1 trillion, Lucid Motors does not look too expensive with its $57 billion market cap. On an absolute basis, many might find Lucid Motors’ valuation too steep. However, one has to take a long-term view and look at the valuations on a relative basis. When compared with EV companies like Tesla and NIO, LCID does not look much overpriced at these prices.

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