The Importance of Monitoring Lucid’s Price Level

Lucid (LCID) shares experienced a significant drop in premarket trading on Tuesday following the luxury electric vehicle maker’s announcement of a wider-than-expected quarterly loss, reaffirmation of its soft 2024 production guidance, and projection of an increase in capital expenditures. Investors are advised to pay close attention to the $2.65 price level, where buying interest may emerge near the 50-day moving average and a horizontal line connecting two recent troughs in January and March.

Key Takeaways

• Lucid shares declined over 8% in premarket trading after reporting a larger-than-anticipated quarterly loss and reiterating conservative 2024 production estimates.
• The company’s production guidance of 9,000 vehicles falls short of analysts’ expectations of 12,677 units.
• Investors should monitor the $2.65 price level for potential support as it aligns with technical indicators on the chart.

Quarterly Performance and Market Reaction

During the first quarter of the year, Lucid posted an adjusted per share loss of 30 cents, exceeding Wall Street’s forecast of a 25-cents-a-share loss. Despite revenue reaching $173 million, a 16% increase from the previous year, nearly $51 million came from the Saudi government, which holds a majority stake in the company. Concerns about Lucid’s demand were raised by Future Fund Active ETF co-founder Gary Black, noting a 19% year-over-year revenue decline excluding Saudi sales.

On the delivery front, Lucid handed over 1,967 vehicles in the quarter, up from 1,406 units in the same period last year. This increase was attributed to price cuts on its Air luxury sedans earlier in the year to attract more price-sensitive consumers amidst high interest rates.

Future Outlook and Production Guidance

Looking ahead, Lucid reiterated its 2024 production target of 9,000 electric vehicles, an increase from the previous year but falling short of analysts’ projections. The company also anticipates capital expenditures to rise to $1.5 billion this year as it prepares to launch its highly anticipated Gravity SUV in the latter half of the year.

Chart Analysis and Price Levels

Despite being in a long-term downtrend, Lucid shares saw a brief countertrend rally leading up to the earnings announcement. In light of post-earnings selling pressure, investors should closely watch the $2.65 price level. This area is significant as it aligns with the 50-day moving average and a horizontal line connecting recent lows in January and March. A breach below this level could potentially lead to a retest of the stock’s record low around $2.30.

As of early morning trading, Lucid shares were down 8.5% at $2.79.

Disclaimer: The views and opinions expressed in this article are for informational purposes only and do not constitute financial advice. The author does not hold any positions in the securities mentioned at the time of writing.

Original Source: Investopedia