Lucid Group Inc (NASDAQ: LCID) tumbled as much as 9.0% after reporting its fiscal Q2 earnings – but a Stifel analyst warns the EV company faces bigger challenges in the second half of 2025.
Stephen Gengaro issued a cautious note on LCID shares this morning, citing deeper concerns about the electric vehicle firm’s financial sustainability.
While Lucid came in ahead of revenue expectations in the second quarter – its gross profit missed expectations, and the management’s revised production guidance signals more than just temporary turbulence.
Including today’s decline, Lucid stock is down roughly 45% versus its year-to-date high.
Why Lucid stock’s 1-for-10 reverse stock split is a red flag
Lucid executed a 1-for-10 reverse stock split on August 29th, which was far from a strategic move. In fact, if anything, it was actually a survival tactic.
If it weren’t for the reverse stock split, LCID shares would’ve been delisted from Nasdaq this year. While the maneuver doesn’t change the EV firm’s market cap, it does signal distress.
Reverse splits are often seen as last-ditch efforts to maintain listing compliance, and they tend to erode investor confidence.
For Lucid stock, the optics are especially troubling: a premium electric vehicle brand resorting to a mechanical fix to stay afloat. It’s a red flag that suggests deeper structural issues – not temporary market volatility only.
Why Stifel lowered its price target on LCID shares
Stifel remains cautious on Lucid shares despite their sharp decline in 2025 since earnings weakness may be the least of the management’s concerns right now.
In his research note, Stephen Gengaro flagged the company’s deteriorating cost efficiency, and the likelihood of a capital raise as key concerns, which cast doubt on LCID’s near-term viability.
With $4.86 billion in liquidity at writing, the automaker isn’t on the brink but its burn rate and lack of profitability does raise alarms.
Add to that the intensifying competition particularly from China-based rivals – and Lucid’s path to scale looks increasingly uphill, even with standout products like the Air sedan and Gravity SUV.
Note that raising fresh capital will prove a negative for LCID shares as it will dilute the company’s existing shareholders further.
Should you buy the post-earnings dip in Lucid shares
Lucid’s engineering pedigree is undeniable, and its vehicles continue to earn praise for design and performance. But in today’s EV market, tech alone isn’t enough.
Investors want scale, profitability, and strategic clarity but LCID’s lowered production guidance, reverse split, and potential capital raise suggest a company still struggling to find its footing.
That’s why the consensus rating on LCID stock currently sits at “hold” only. Until the EV company proves it can convert innovation into sustainable growth, the Lucid shares remain a speculative bet at best.
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