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On Monday, Redburn-Atlantic issued a downgrade for Lucid Group Inc. (NASDAQ:LCID), shifting their stance from Neutral to Sell. The firm also reduced its price target for Lucid’s shares dramatically, setting it at $1.13, a steep decline from the previous target of $3.50. The electric vehicle maker, currently valued at $9.2 billion, has been facing significant financial challenges, with InvestingPro data showing a negative free cash flow of $2.8 billion in the last twelve months. Redburn-Atlantic’s Tobias Beith expressed concerns regarding the electric vehicle maker’s financial outlook, anticipating significant cash outflows extending over the next several years.
Beith’s analysis points to potential challenges for Lucid’s competitors in matching the efficiency of its vehicles before 2030. However, the advantage Lucid may gain from this efficiency is contingent on a sharp increase in production volumes following the launch of its mid-sized platform, expected in the second half of 2026. InvestingPro analysis reveals concerning metrics, including a negative gross profit margin of -132.4%, though the company maintains strong liquidity with a current ratio of 3.71. Despite consensus modeling that forecasts this scale-up, Beith is wary of the financial implications, suggesting that the market may be underestimating the extent and duration of Lucid’s cash burn.
According to Beith, there is a considerable discrepancy between the cash flow projections from Redburn-Atlantic and the consensus estimates. Over the fiscal years 2025 to 2030, the firm anticipates a cumulative free cash flow ’gap’ of approximately $11 billion. This gap indicates that Lucid may need to secure substantial additional capital if Redburn-Atlantic’s projections hold true.
The revised price target of $1.13 from the previous $3.50 reflects these concerns, as Beith’s report underscores the potential financial strain on Lucid in the coming years. The expectation of larger and prolonged cash outflows than the market expects is the primary driver behind the downgrade and the reduction in the price target for Lucid’s stock.
Lucid Group Inc. has yet to respond to the downgrade and revised price target. The company’s stock performance in the coming days will likely reflect investor reactions to Redburn-Atlantic’s new assessment. With earnings scheduled for release tomorrow, investors and market watchers will be closely monitoring Lucid’s financials and any strategic moves the company makes to address the concerns raised by Redburn-Atlantic. For deeper insights into Lucid’s financial health and detailed analysis, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
In other recent news, Lucid Group has announced the availability of its Lucid Gravity Grand Touring SUV in Canada, with orders now open at a starting price of $134,500 CDN. This model boasts 828 horsepower and a range of over 720 kilometers on a single charge. The company also revealed pricing for the Lucid Gravity Touring model, which will be available in late 2025 at a starting price of $113,500 CDN. Meanwhile, Lucid Group is undergoing significant executive changes, appointing Taoufiq Boussaid as the new Chief Financial Officer and promoting Emad Dlala to Senior Vice President of Powertrain.
In terms of analyst activity, CFRA has downgraded Lucid’s stock rating to Strong Sell, citing concerns over the company’s high cash burn rate and competitive challenges. Despite this, Lucid exceeded CFRA’s production and delivery estimates for the fourth quarter, producing 3,386 units and delivering 3,099. The company is set to report its fourth-quarter earnings on February 25. Lucid’s focus on innovation continues, with its proprietary electric powertrain technology being a key feature of the new Gravity SUV lineup.
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