Is it Time to Step Back into Lucid Stock?

U.S. based luxury electric vehicle (EV) maker Lucid Motors NASDAQ: LCID stock has seen a resurgence as it ups the delivery date for its Dream EV to the end of October 2021. Shares collapsed to a low of $16.12 on the first lock-up expiration on Sept. 1, 2021 on dilution fears for the former special purpose acquisition company (SPAC) and have since rocketed back to peak around the $28.18 level before its latest pullback. With the timeline for production deliveries, investors have jumped back into this Tesla NASDAQ: TSLA competitor as its Lucid Air Dream boasts a 520-mile range on a single charge making it the record holder for the longest range capability for an EV. MotorTrend gave it a “flawless” review in August 2021. The Company has kicked off its Production Preview Week at AMP-1 in late September to continue to promote the production of its luxury brand. Investors are stepping back into shares during the reopening trend as the Company sets its sights on full commercial production and deliveries in 2022. Risk-tolerant investors seeking exposure in a high-end luxury EV play benefitting from the reopening trend can watch for opportunistic pullbacks in shares of LCID. 

Lucid Dilution Fears Are Over

The dilution factor has been the toughest element to shake off during the SPAC days as Churchill Capital IV shares peaking in the $60s before the business combination reverse merger to trade under the symbol LCID. Upon the completion of the business combination, there were a number of bagholders stuck in shares much higher hoping for shares to finally bottom out as it continued to sell-off. The final bottom was made in a harrowing sell-off into the first lock-up period on Sept. 1, 2021 as they collapsed to $16.12. Capitulation finally hit on fears of further dilution from the exercising of warrants at $11.50 per share from PIPE investors. As it turns out, the exercise had to be done prior to shares of LCID trading above $18 for more than 20-consecutive trading days, at which point they would expire. Therefore, the majority of warrants should have been exercised upon lock-up as shares spiked back up through $20 in September. One thing investor should note is that the largest holder of warrants with nearly 62% of LCID shares is the Saudi Arabia Public Investment Fund. They are long-term holders seeking to promote EV adoption and growth in Saudi Arabia. The exercising of all warrants while not likely would also set-up for an additional $1 billion in capital for the Company.

Lucid Air Production

Lucid CEO confirmed on CNBC that production is underway with deliveries of the first Lucid Air Dream models to be delivered by the end of October 2021. The Company has secured more than 10,000 reservations and the reviews are outstanding. MotorTrend  gave it a “flawless” review rating in August 2021. The Company is expected to deliver up to 577 vehicles by the end of 2021 as it ramps up commercial production in 2022.

LCID Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frame provides a near-term view of the landscape for LCID stock. The weekly rifle charts peaked near the $29.47 Fibonacci (fib) level. Shares sold off to bottom out near the $18.83 fib and has since staged a rally with the weekly stochastic cross up. The weekly 5-period moving average (MA) is rising at $22.50 towards the 15-period MA at $23.37. The weekly stochastic crossed up towards the 50-band. The weekly upper Bollinger Bands sit just above the $28.67 fib. The weekly market structure low (MSL) buy triggered on the breakout above $20.62. The daily rifle chart has a make or break as the uptrend slows down on the 5-period MA flattening at $25.34 with 15-period MA tightening at $23.76. The daily stochastic has a mini inverse pup under the 70-band. The make or break will set up for a breakout on the stochastic cross back up as shares blast up through the daily 5-period MA towards the upper BBs. The bearish set-up would be a continued stochastic mini inverse pup drop as the 5-period MA crosses down through the 15-period MA for a breakdown towards the daily MSL trigger at $20.62. Prudent investors can watch for opportunistic pullback levels at the $23.36 fib, $22.29 fib, $21.04 fib, $20.17 fib, $19.37 fib, and the $18.42 fib. Upside trajectories range from the $28.18 fib level up to the $35.32 fib level.