Lucid Would 'Likely Be Half' Of Current Value If Not For This, Says Analyst After Stock's 11% Slump: 'Makes Absolutely No Sense'

Lucid Group, Inc. LCID shares plummeted over 11% on Wednesday after the electric vehicle startup's second-quarter deliveries missed expectations and production fell from the previous quarter.

What Happened: Lucid's year-to-date deliveries were at 2,810 units, and this has left the company at risk of finishing 2023 below its guidance of 10,000 units, said Gary Black, Managing Partner and co-founder of Future Fund.

If Saudi Arabia hadn't backed the company by taking a 65% ownership, the stock would likely be half of where it is today, the fund manager said. He estimated a likely stock price of $3-$4 if not for the support from the Middle East.

Black noted that rival startup Rivian Automotive, Inc. RIVN is on track to deliver 50,000 units in 2023 and has an enterprise value of $15 billion. The metric is calculated by deducting Rivian's net cash of $7.9 billion from its market cap of $22.9 billion.

In comparison, Lucid will likely deliver 6,000 vehicles in 2023 and has an enterprise value of $16 billion, which is the company's market cap of $16.6 billion, less net cash of $0.6 billion, Black said.

“This makes absolutely no sense,” he added.

See Also: Best Electric Vehicle Stocks

Why It's Important: Lucid's Air sedan caters to the high-end market and the poor uptake may be partly blamed on the uncertain economic environment that has rendered the mood of consumers cautious.

As has been pointed out by Tesla, Inc. TSLA CEO Elon Musk many times in the past, prototype is easy and production ramp-up is the toughest part of manufacturing.

The billionaire has in fact warned of potential bankruptcies of Rivian and Lucid if they do not take efforts to rein in costs.

Cash-strapped Lucid recently raised $1.2 billion in an underwritten common stock offering. Its Saudi promoter Ayar Third Investment Company, an affiliate of the Public Investment Fund, purchased 265.7 million shares through a private placement, which fetched it about $1.8 billion.

Lucid ended Wednesday's session at $7.16, down 11.82%, according to Benzinga Pro data.

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