What Happened?
Shares of luxury electric car manufacturer Lucid (NASDAQ: LCID) fell 4.3% in the afternoon session after the company prepared to execute a reverse stock split and an analyst lowered the stock's price target.
Lucid is set to enact a 1-for-10 reverse stock split after the market closes today. This action, often viewed as a warning sign, consolidates every ten shares into one to boost the stock price, primarily to avoid being delisted from the Nasdaq exchange. While the move will lift the share price, it doesn't address the company's fundamental challenges.
Compounding the negative sentiment, Stifel analyst Stephen Gengaro maintained a "Hold" rating on Lucid but significantly cut the price target from $3.00 to $2.10. The analyst noted that while Lucid's vehicles are "excellent products," the company will likely require additional capital over the next few years. The stock's decline adds to a difficult year, with shares down roughly 34% year-to-date following a disappointing second-quarter earnings report and lowered 2025 production guidance.
The shares closed the day at $1.99, down 4.3% from previous close.
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What Is The Market Telling Us
Lucid’s shares are extremely volatile and have had 49 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 15 days ago when the stock dropped 4.1% on the news that an unexpectedly sharp rise in wholesale inflation fueled concerns about rising costs and their impact on corporate profits. The primary catalyst was the July 2025 Producer Price Index (PPI), a measure of inflation at the wholesale level, which jumped 0.9% against forecasts of a 0.2% rise. This represents the most significant monthly increase in over three years, pointing to mounting cost pressures for manufacturers, with tariffs cited as a key factor. This data complicates the Federal Reserve's upcoming interest rate decisions, as persistent inflation may prevent rate cuts, creating a headwind for cyclical sectors like Industrials.
Lucid is down 34% since the beginning of the year, and at $2 per share, it is trading 50.2% below its 52-week high of $4.02 from August 2024. Investors who bought $1,000 worth of Lucid’s shares at the IPO in September 2020 would now be looking at an investment worth $202.22.
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