Lucid stock dips after Redburn-Atlantic slashes price target

Investing.comFeb 24, 2025 5:52 PM

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Lucid Group Inc (NASDAQ:LCID), an electric vehicle manufacturer, saw shares drop by 7.2% on Monday after Redburn-Atlantic downgraded their stock rating and slashed their price target. Redburn analyst Tobias Beith cautioned investors that while Lucid's lead on engineering efficiency may be attractive, it should be equalled or overtaken by 2030.

Beith lowered the stock rating on Lucid from Neutral to Sell and also significantly decreased the price target from $3.50 to $1.13.

The analyst commented, "Our work suggests it may be challenging for Lucid’s peers to replicate the efficiency of its vehicles before 2030. However, the resultant cost advantage requires volumes to build sharply once the mid-sized platform is launched in 2H26E (December Y/E). We model that this happens, like Consensus, but conclude cash outflows are larger, for longer, than the market expects. The cumulative free cash flow ‘gap’ between us and Consensus over FY25-30E is c$11bn. If we are correct, it suggests significant additional capital will eventually be required."

Another reason for the skepticism includes a current lack of scale at Lucid, as well as outsized vehicle costs. These describe the two main deciders of the company's future capital; namely its manufacturing capabilities and its gross margin rate.

Furthermore, Beith stated, "We are more mindful of the relationship between manufacturing capacity utilisation and profits; we are less optimistic about the gross margin rate of the Gravity; and funding is harder to access, so management should act in a way that pulls profits forward and minimises capital intensity."

Investors have appeared to heed Redburn-Atlantic's long term apprehension, despite the analyst's acknowledgment of positive 2026 prospects.

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