Luxury electric vehicle maker Lucid Group (LCID) is set to implement a 1-for-10 reverse stock split after the market closes on August 29. This move will consolidate every ten shares, currently trading at around $2 each, into one share priced at approximately $20. When trading resumes on September 2, the stock will appear to surge by 900%, though the company’s market capitalization remains unchanged.
A reverse stock split is often viewed as a warning sign, in contrast to forward splits—like Tesla’s 5-for-1 split in August 2020—which are typically executed to make shares more accessible to retail investors. Reverse splits usually occur when a stock is declining and are primarily aimed at maintaining a share price above $1 to avoid delisting from the exchange, in Lucid’s case, the Nasdaq. While this action may stave off delisting for now, it does not address the company’s fundamental issues.
Lucid’s core challenges stem from significant shortfalls in production and deliveries. After going public via a SPAC merger four years ago, the company projected deliveries of 20,000, 49,000, and 90,000 vehicles for 2022, 2023, and 2024, respectively. However, actual deliveries reached only 4,369 in 2022, 6,001 in 2023, and 10,241 in 2024. The launch of its second model, the Gravity SUV, has been postponed to 2025. Additionally, former CEO and Chief Technology Officer Peter Rawlinson stepped down in February, and the board has yet to appoint a permanent successor.
Despite strong backing from Saudi Arabia’s Public Investment Fund (PIF), which owns over 60% of the company, and a liquidity buffer of $4.86 billion, Lucid continues to face supply chain constraints, intense competition, and broader headwinds in the EV market. In 2024, revenue increased by 36% to $808 million, but its net loss widened to $3.1 billion from $2.8 billion—translating to a loss of $299,000 per vehicle sold. To stay competitive, Lucid has repeatedly reduced the starting price of its Air sedan, from $80,000 to about $71,400 today.
Looking ahead, Lucid plans to produce 18,000 to 20,000 vehicles in 2025 and launch a more affordable SUV, likely named “Earth,” in 2026. Analysts expect revenue to rise to $1.3 billion in 2025 and $2.5 billion in 2026, with net losses narrowing to $2.8 billion and $2.4 billion, respectively. However, Lucid remains a minor player compared to Tesla, which delivered 1.79 million vehicles and generated $97.7 billion in revenue in 2024. Lucid’s market cap of $6.4 billion reflects a price-to-sales ratio of 5, versus Tesla’s ratio of 12.
If Lucid can execute its plans and achieve a valuation similar to Tesla’s, its stock could potentially double or triple. However, the reverse stock split merely buys time and does not enhance the investment case. Investors are advised to remain cautious until more positive indicators emerge.
