Shares of Lucid Group (LCID, Financial) surged as much as 6.7% to start the holiday-shortened trading week following news that the largest public pension fund in the country increased its stake in the company. However, the stock's early gains quickly evaporated, eventually closing down 2.99% at $3.8999.
The California Public Employees' Retirement System (Calpers) reported in its latest Form 13F filing with the SEC that it added more than 250,000 Lucid shares, bringing its total to over 1.3 million shares valued at approximately $5 million by the end of the second quarter. This increase in Calpers' holdings has been perceived as a positive signal for Lucid, although its impact on the stock price was short-lived.
Lucid shares have seen a positive trend since the second quarter, buoyed by better-than-expected revenue and a significant $1.5 billion investment from its largest shareholder. Despite this, the recent increase in Calpers' holdings is relatively small compared to its overall portfolio. For instance, Calpers sold 14 million Nvidia shares in the second quarter but still holds 63 million shares worth around $7 billion.
The modest size of Calpers' investment in Lucid is likely why the stock's early gains evaporated. Lucid (LCID, Financial) is on a challenging path to profitability. The company's future performance hinges on the success of its upcoming Lucid Gravity SUV, the first new model since the Air luxury electric sedan.
According to the latest data, Lucid (LCID, Financial) has displayed poor financial strength. The Altman Z-score of -1.29 suggests it is in the distress zone, indicating a potential bankruptcy possibility in the next two years. Furthermore, the Beneish M-Score of 1.67 implies possible financial result manipulation. The stock has a GF Value rating as a Possible Value Trap, Think Twice, with a GF Value of $8.88.
Lucid's market cap stands at $9.04 billion, with a price-to-book ratio of 2.57. The company has no PE ratio as it has been unprofitable, with a trailing twelve months (TTM) revenue of $668.29 million and a TTM EPS of -$1.21. The company's operating income has been negative for the past three years, and it has consistently issued new debt, amounting to $3.9 billion over the past three years. The total buyback yield for the past three years is -352.4%.
Lucid faces significant challenges but has shown some positive growth signs. The revenue growth over the past 3 years stands at 64.9%, and the cash flow growth also improved at 66% over the same period. Despite its struggles, Lucid is making strides in the highly competitive EV market, positioning itself with new product launches like the Lucid Gravity SUV.
However, investors should approach with caution given the warning signs related to financial health and profitability. The company’s future largely depends on its ability to turn around financial performance and capitalize on new model launches.
```
