Update - January 31, 2023

Lucid Soars!

I hope you’ve been watching Lucid Group (LCID), a recommendation in one of our special reports. It’s been on one heck of a ride.

Friday was the big day… the really BIG day.

Shares of the high-end EV maker jumped by as much as 86% during the session before closing some 43% higher.

It was a huge move driven by rumors of an acquisition.

If you’ve been following along, you know that Saudi Arabia is one of Lucid’s biggest customers. It has promised to buy as many as 100,000 cars from the company over the next decade.

To satisfy the order, Lucid plans to build a plant within the country’s borders.

It makes sense that the two are working together so closely… Saudi Arabia owns 60% of the company’s shares.

Friday’s rumors have the country using its sovereign wealth fund to purchase all remaining shares.

There is no proof the rumors are true yet – just a couple of analyst reports and a story from Reuters. The idea makes sense, though. Clearly the market believes it’s feasible.

Last year was a tough one for the carmaker. Chip problems slowed production (although Lucid just increased its 2023 forecasts), bringing earnings and share price down. If Saudi Arabia were going to step in, now would be an ideal time. Shares are significantly cheaper than they were a year ago when the country first jumped in.

It raises a question…

Do I maintain my current “Buy” rating for the stock?

Absolutely.

One of the reasons there was such a chaotic run on Friday was the large amount of Lucid shares that are sold short. With negativity surrounding Tesla (TSLA) and the industry experiencing production issues, a relatively large group of investors has been betting against Lucid.

Their move backfired last week. Many were forced to sell into the rumor to keep from losing even more money. It’s what sent shares flat-out rocketing higher.

That selling pressure has died down. Shares dipped yesterday and are weak again today.

It means we ought to maintain our current path. With much of the short pressure out of the way, we’re starting to see the true value of Lucid. The market is discovering that the company is more valuable than Wall Street had projected. It’s why mere rumors of a buyout were enough to nearly double the stock’s value in a day.

If you own shares, continue to hold. If you don’t own shares, it’s a fine time to buy.

Lucid is the top high-power EV maker on the planet. Its price will soon reflect that.

Note: There was another big news story last week, but it was overshadowed by the Saudi rumors. Lucid announced it will include its 469-hp electric drive units in every Gen3 Formula E race car. That’s a big step forward for the company – one that will do wonders for its reputation. Good things are on the way.