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Why Lucid Stock Fell 25% in October
Key Points
The company cut a shift at its AMP-1 factory to better match customer demand, resulting in a 24% decline in vehicle production in the third quarter.
Two analysts cut their price targets for Lucid's shares in October.
The company borrowed an additional $400 million during the month, worrying some investors that Lucid continues to face financial hurdles.
Shares of the electric automaker Lucid (NASDAQ:LCID) tumbled last month after the company reported disappointing vehicle production and deliveries. Two analysts also cut their Lucid stock price targets in October, and the company borrowed another $400 million, adding to shareholder concerns about its financial health.
Lucid stock has been steadily declining this year, and the company's shares fell an additional 25.8% in October, according to data provided by S&P Global Market Intelligence.
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Lucid can't get itself started
The beginning of October was rough for Lucid after the company announced that its third-quarter vehicle deliveries declined 6.7% to 3,806 and vehicle production fell 24% to 2,954.
While investors didn't like to see Lucid's vehicle production and deliveries decline, it wasn't entirely unexpected. The company had previously said it would slow production to better align with demand, cutting a shift at its AMP-1 factory to close the gap.
But Lucid shareholders likely focused on the idea that customer demand isn't high enough for Lucid's vehicles and the fact that both deliveries and production fell below Wall Street's consensus estimates for the third quarter.
The bad news kept coming for Lucid throughout the month, with Morgan Stanley cutting its Lucid stock price target to $3 from $5 and RBC lowering its price target to $4 from $7. Investors responded negatively to the price target cuts and sent Lucid stock down further.
What's more, Lucid drew another $400 million from an affiliate of the Saudi Arabian Public Investment Fund in October. The company has had to borrow extensively from the fund, and investors have grown increasingly concerned about the company's overall financial outlook. Lucid is trying to right the ship, with the company announcing in August that it was making $1.4 billion in cash flow improvements this year.
But Lucid shareholders have grown impatient, and October was another clear sign that investors are losing faith in the troubled EV maker's ability to turn things around.
November could be bumpy too
Lucid reported its third-quarter financial results today, with revenue of $350 million and a loss of $2.74 per share. That was below Wall Street's consensus estimates of $407 million in revenue and a loss of $2.28 per share for the quarter.
The company also announced it would receive a $1.75 billion increase from the Public Investment Fund for "additional financial flexibility" to help fund operations into Q4 2027, and added that it had reduced its quarterly cash consumption by 30%.
While that should ease some investor concerns, I think Lucid still has a lot more to prove before it deserves a spot on your buy list.
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.