Electric vehicle (EV) maker Lucid Group (LCID Quick QuoteLCID - Free Report) hit a 52-week low of $2.02/share last Wednesday. Since then, this penny stock has rallied roughly 16%. The company’s third-quarter results (released last Thursday) were somewhat mixed. While Lucid incurred a wider-than-expected loss in the quarter, revenues surpassed estimates. But what seems to have renewed investor confidence in the stock is the opening up of the order book for its new offering ­— Gravity SUV. Additionally, LCID posted on X yesterday that its Air sedan participated in California Highway Patrol (CHP) tests, likely sparking investor interest.

Let’s take a look at the highlights of the company’s latest results as well as growth drivers and challenges to assess if now might be the right time to snap up Lucid shares.

LCID Q3 Results Key Takeaways

Lucid incurred a quarterly loss of 41 cents a share, wider than the Zacks Consensus Estimate of a loss of 32 cents as well as the year-ago loss of 28 cents. High R&D and SG&A costs impacted margins. Both metrics rose from the year-ago period to roughly $558 million. Meanwhile, revenues for the quarter came in at $200.4 million, up 45.4% year over year, and topped the consensus mark of $194 million.

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Revenues got a boost from a massive jump in deliveries. Lucid delivered 2,781 vehicles in the September quarter (up 91% year over year), marking the third consecutive quarter of record deliveries. Meanwhile, LCID’s close peer Rivian (RIVN Quick QuoteRIVN - Free Report) witnessed a 36% year-over-year drop in third-quarter deliveries.

Lucid reaffirmed its annual production target of 9,000 units.With just 5,642 cars manufactured in the January-September timeframe, the company will need to significantly ramp up production to meet its delivery goals.

It exited the third quarter with approximately $5.16 billion in total liquidity, including $1.89 billion in cash/cash equivalents.

Key Catalysts to Buoy Lucid

Gravity SUV To Be Game Changer: Lucid is betting on its upcoming Gravity SUV as a potential breakthrough in the North American EV market, where SUVs and crossovers are increasingly popular. Production is set to start later this year. Pre-orders began last Thursday for the "Grand Touring" model, boasting 800+ horsepower and 440-mile range, starting at $94,900. A more affordable "Touring" version will start at $79,900 in late 2025. Additionally, Gravity owners will benefit from access to Tesla’s (TSLA Quick QuoteTSLA - Free Report) extensive NACS charging network, enhancing the vehicle's appeal. Lucid CEO Peter Rawlinson highlighted Gravity’s potential, noting its addressable market is six times that of the Lucid Air sedan. The company expects Gravity SUV to boost its growth prospects significantly. 

Expanding into Law Enforcement Fleets: In another strategic move, Lucid’s Air sedan participated in tests for the California Highway Patrol (CHP), hinting at possible future EV deployments within law enforcement. If successful, Lucid would join a growing number of EVs in California’s police fleet. Lucid has also gained international exposure, with Dubai police incorporating the Air Grand Touring model into their fleet.

Saudi PIF Backing: The company’s growth is underpinned by strong support from Saudi Arabia’s Public Investment Fund (PIF), its largest shareholder, holding a majority stake. This relationship has brought significant financial stability to Lucid, as PIF has facilitated major funding rounds and strategic agreements, including a commitment from the Saudi government to purchase up to 100,000 Lucid vehicles over the next decade.

Extended Financial Runway: Subsequent to the third quarter, LCID raised $1.75 billion in capital, which further bolsters its cash reserves, extending Lucid’s financial runway into 2026 and supporting its long-term ambitions in the competitive EV space.

LCID Stock’s Premium Valuation Fading

Lucid's stock has tumbled 44% year to date and is down 96% from its all-time high of $58 in early 2021. Back then, Lucid had entered a market brimming with EV enthusiasm, capturing investor excitement, much like AI today. Positioned as a pure-play EV brand, Lucid aimed to lead the ultra-luxury EV segment, debuting with the Lucid Air — a model praised for its range, power, and design.

However, the EV market has evolved and the company now faces a tougher landscape. EV adoption hasn’t surged as anticipated, with legacy automakers increasingly dominating. Brands like Cadillac and Mercedes-Benz are stepping into the luxury EV space, intensifying competition. These shifts have caused Lucid's lofty valuation to cool off, reflecting a market that now prizes execution and scale over promise alone.

Image Source: Zacks Investment Research

Buy the Dip in Lucid Shares

Lucid has made notable strides in 2024, breaking delivery records and laying the groundwork for future growth with new models. Total deliveries in the first three quarters reached 7,142 vehicles, already exceeding the 6,001 delivered in 2023. With the highly anticipated Gravity SUV set for launch and strong financial backing, Lucid seems poised for further progress.

However, investors should remain mindful of the company’s cash burn and potential for further equity dilution. While challenges remain, and some may view optimism as premature, Lucid's recent developments suggest the company is on an upward path. The Zacks Consensus Estimate for 2024 and 2025 project year-over-year sales growth, indicating confidence in Lucid’s potential.

Image Source: Zacks Investment Research

With shares down significantly from their highs, current valuations offer a buying opportunity for investors who believe in Lucid’s efforts and strategic initiatives. For investors willing to balance the risks with potential rewards, this could be the right time to place your bets on the stock.

LCID currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.