Lucid Group, Inc. (LCID) is a technology and automotive company that develops the next generation of electric vehicle (EV) technologies. The company creates electric cars, EV powertrains, and battery systems. The stock has slumped nearly 52.5% year to date and 33.9% over the past month to close its last trading session at $18.08.

LCID is lowering its manufacturing targets. The company said in February that it would supply between 12,000 and 14,000 automobiles in 2022. That’s far lower than the company's initial expectation of 20,000 automobiles. The stated explanation was supply chain issues. However, it has piqued the interest of some attorneys, and a class-action complaint has been filed against the company. The primary complaint is that the company's production estimates are far lower than what LCID projected during the IPO process.

Here's what could shape LCID's performance in the near term.

Click here to checkout our Electric Vehicle Industry Report for 2022

Poor Bottom line Performance

LCID's total revenue increased 626.3% year-over-year to $26.39 million for the three months ended December 31, 2021. However, its operating expenses increased 151.8% from the year-ago value to $512.08 million. Its operating loss grew 143.2% from the prior-year quarter to $485.68 million. The company's net loss increased 251.5% year-over-year to $1.05 billion in the prior-year period. Its loss per share came in at $0.64 over this period.

Stretched Valuation

In terms of forward Price/Book, the stock is currently trading at 14.41x, 493.7% higher than the industry average of 2.43x. Also, its trailing-12-months EV/Sales of 20.14x is 1705.3% higher than the industry average of 1.12x. Moreover, LCID's trailing-12-months Price/Sales of 23.3x is 2337.6% higher than the industry average of 0.95x.

Poor Profitability

LCID's trailing-12-months asset turnover ratio of 0.01% is 99.5% lower than the industry average of 1.05%. Its trailing-12-months cash from operations stood at a negative $1.06 billion compared to the industry average of $159.19 million. Also, its trailing-12-months ROA and ROC are negative 32.7% and 26.2%, respectively.

POWR Ratings Reflect Bleak Outlook

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

Our proprietary rating system also evaluates each stock based on eight different categories. LCID has an F grade for Value and Quality. The company's higher than industry valuation is consistent with the Value grade. In addition, LCID's poor profitability is in sync with the Quality grade.

Of the 69 stocks in the F-rated Auto & Vehicle Manufacturers industry, LCID is ranked #60.

Beyond what I've stated above, you can view LCID ratings for Growth, Momentum, Stability, and Sentiment here.

Bottom Line

The present semiconductor and labor shortages may cause unforeseen manufacturing delays and roadblocks. Furthermore, LCID confronts severe competition in the saturated EV industry. Because the stock appears expensive at the current price level, we believe it is best avoided now.

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

While LCID has an overall F rating, one might want to consider its industry peers, Isuzu Motors Limited (ISUZY), Volkswagen AG (VWAGY), and Jardine Cycle & Carriage Limited (JCYGY), which have an overall B (Buy) rating.

LCID shares fell $0.12 (-0.66%) in premarket trading Monday. Year-to-date, LCID has declined -52.75%, versus a -13.15% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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