Lucid Group Stock News and Forecast: LCID registers new low for year
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UPGRADE- Lucid stock fell sharply on Friday, down nearly 9%.
- LCID stock is now down just under 71% year-to-date.
- Lucid share price makes a fresh yearly low on Friday.
Electric vehicle stocks continue to suffer from the rising interest rate environment as investors increasingly diversify away from high valuations and high-duration assets. High-duration assets are those that suffer more in the face of rising interest rates. With the Fed pivot now a thing of the past, once again we are back at near 100% certainty of a 75bps hike in November. So far, no one is contemplating 100bps, but that may come into the picture if inflation data and employment remain strong.
All this adds to pressure on high-growth stocks with high valuation multiples. Unfortunately for the EV space, this includes many stocks in its sphere, including Lucid (LCID). Tesla (TSLA) is falling sharply, Rivian (RIVN) is down 72% year to date, and Chinese EV names are also suffering. A turnaround may be set up due to overly short positioning and bearish sentiment, but that is likely to focus on quality beaten-down tech names, banks and high-quality consumer names with pricing power. With interest rates looking like 5% may be the new 4%, high growth is likely to continue to underperform.
Lucid stock news
The sell-off on Friday to set a new low for the year at $11.87 was not the product of any fresh information that we are aware of specific to Lucid. Delivery numbers had come out earlier on Thursday, but Lucid did not participate in the huge rally following Thursday's CPI. This was an indication that the stock was still struggling and would likely fall sharply once broad-based selling resumed.
That is exactly what happened on Friday. Lucid stock fell over 8% and closed only two ticks above the low of the day. No rally into the close then. Lucid was always a long-term play, and the thesis has not changed, just the macroeconomic backdrop has increased pressure on everyone in the EV sector. Lucid in fact may be in a better position than most due to its backing from the Saudi Investment Fund. Morgan Stanley made that point in a note last week: "It is our working assumption that the relationship between the Kingdom of Saudi Arabia and Lucid could extend beyond a controlling shareholder status."
Lucid stock forecast
Any hope for LCID stock bulls? Perhaps there is in the short term. Overall equity sentiment looks too bearish in my view and so too does positioning. This may lead to a bear rally that could extend to the year's end. Earnings season so far looks fine, and if that trend continues it will kick off a rally. Midterms are usually bullish. With positioning being so short, the market could see a massive squeeze, and then the CTA trend-following systems will jump in and overextend the rally. This would be similar to the June and July rally this summer. Also once earnings season is over, we get massive stock buybacks yet again as most are in a blackout period currently. Next week buybacks resume with decent size.
Technically, there is little support down here. $10 is the cash SPAC-level support from the CCIV stock days, but not really technically significant and obviously no longer a fact. Most SPACs hold $10 in cash to return to shareholders if they did not find a merger target, so it tended to put a floor on many SPAC prices. Resistance levels to watch are the zone from $13.25 to $13.58. A move above would mean the 9-day moving average is retaken and perhaps indicate some form of recovery.
LCID stock chart, daily
- Lucid stock fell sharply on Friday, down nearly 9%.
- LCID stock is now down just under 71% year-to-date.
- Lucid share price makes a fresh yearly low on Friday.
Electric vehicle stocks continue to suffer from the rising interest rate environment as investors increasingly diversify away from high valuations and high-duration assets. High-duration assets are those that suffer more in the face of rising interest rates. With the Fed pivot now a thing of the past, once again we are back at near 100% certainty of a 75bps hike in November. So far, no one is contemplating 100bps, but that may come into the picture if inflation data and employment remain strong.
All this adds to pressure on high-growth stocks with high valuation multiples. Unfortunately for the EV space, this includes many stocks in its sphere, including Lucid (LCID). Tesla (TSLA) is falling sharply, Rivian (RIVN) is down 72% year to date, and Chinese EV names are also suffering. A turnaround may be set up due to overly short positioning and bearish sentiment, but that is likely to focus on quality beaten-down tech names, banks and high-quality consumer names with pricing power. With interest rates looking like 5% may be the new 4%, high growth is likely to continue to underperform.
Lucid stock news
The sell-off on Friday to set a new low for the year at $11.87 was not the product of any fresh information that we are aware of specific to Lucid. Delivery numbers had come out earlier on Thursday, but Lucid did not participate in the huge rally following Thursday's CPI. This was an indication that the stock was still struggling and would likely fall sharply once broad-based selling resumed.
That is exactly what happened on Friday. Lucid stock fell over 8% and closed only two ticks above the low of the day. No rally into the close then. Lucid was always a long-term play, and the thesis has not changed, just the macroeconomic backdrop has increased pressure on everyone in the EV sector. Lucid in fact may be in a better position than most due to its backing from the Saudi Investment Fund. Morgan Stanley made that point in a note last week: "It is our working assumption that the relationship between the Kingdom of Saudi Arabia and Lucid could extend beyond a controlling shareholder status."
Lucid stock forecast
Any hope for LCID stock bulls? Perhaps there is in the short term. Overall equity sentiment looks too bearish in my view and so too does positioning. This may lead to a bear rally that could extend to the year's end. Earnings season so far looks fine, and if that trend continues it will kick off a rally. Midterms are usually bullish. With positioning being so short, the market could see a massive squeeze, and then the CTA trend-following systems will jump in and overextend the rally. This would be similar to the June and July rally this summer. Also once earnings season is over, we get massive stock buybacks yet again as most are in a blackout period currently. Next week buybacks resume with decent size.
Technically, there is little support down here. $10 is the cash SPAC-level support from the CCIV stock days, but not really technically significant and obviously no longer a fact. Most SPACs hold $10 in cash to return to shareholders if they did not find a merger target, so it tended to put a floor on many SPAC prices. Resistance levels to watch are the zone from $13.25 to $13.58. A move above would mean the 9-day moving average is retaken and perhaps indicate some form of recovery.
LCID stock chart, daily
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