Why Lucid Motors Stock Soared Today

Lucid Motors (LCID 15.51%) received an upgrade today that has significantly boosted its stock price. Despite this surge, shares of the luxury electric vehicle (EV) manufacturer have struggled overall this year. As of 10:25 a.m. ET, the stock was up by 12.3%, but it remains almost 20% lower since the start of the year.

Analysts suggest that 2023 could be a crucial year for Lucid, and one expert believes the stock had been undervalued.

Analyst Upgrade and Expectations

Morgan Stanley analyst Adam Jonas has revised his outlook on Lucid, according to reports. He upgraded his rating for the company to a hold from a prior recommendation suggesting not to buy. What prompted this change?

Jonas has maintained his price target of $3 per share for Lucid. This price reflects nearly a 40% increase based on the closing price from Monday. Essentially, the analyst seems to be adjusting his view to better align with the recent decline in stock prices.

Additionally, a major factor influencing his change of heart is the recent leadership transition at Lucid. The company announced that its long-time CEO, Peter Rawlinson, would be stepping down, paving the way for new leadership. Jonas posits that fresh management could harness advancements in artificial intelligence (AI) technology to steer the company towards growth.

Technological Innovations and Market Potential

Lucid has developed cutting-edge battery technology, highlighted by its Air Grand Touring sedan, which boasts an industry-leading range of over 500 miles on a single charge. However, the company has not made significant progress in advanced driver assistance or autonomous driving technologies. Jonas theorizes that Lucid could leverage AI innovations for these areas.

A further point of optimism comes from Lucid's partnership with the Saudi Arabian government, which is a substantial shareholder through its sovereign wealth fund. This connection could open doors for AI collaborations.

If Lucid successfully integrates AI to enhance sales domestically and internationally, it could positively impact its business. Recently, Lucid launched the Gravity SUV to complement its Air sedan lineup and anticipates more than doubling production year over year by 2025.

Market Reaction and Considerations

Many investors seem to be reacting strongly to Jonas's report, though some speculate that enthusiasm regarding potential AI applications for Lucid might be premature. Jonas himself is not advocating for buying the stock at this time, suggesting a stance of holding.

Howard Smith has positions in Lucid Group. The analyst community also reflects varying opinions, and investors are advised to consider multiple perspectives on stock performance.

Lucid, Stock, Upgrade