Should you buy Lucid stock when it’s $10 a share?

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Should you buy Lucid stock when it’s a share?

Lucid is an electric vehicle (EV) startup trying to break into the highly competitive automotive sector.
The company has award-winning technology, but its vehicle production rate is too low to be profitable.
A 1:10 reverse stock split in August 2025 is not a good sign for the future.
10 stocks we like better than Lucid Group ›

Lucide Group (NASDAQ:LCID) has invested heavily in its business over the past few years. The result is an award-winning range of premium vehicles featuring cutting-edge battery technology. What’s still missing is scale. Here’s why only the most aggressive investors should consider buying Lucid stock while it’s trading below $11 a share.

Lucid is an automobile manufacturer. More specifically, it manufactures high-end electric vehicles (EVs). But at present, this distinction is not the most important. The key is that building and selling cars of any kind requires a massive support infrastructure.

Image source: Getty Images.

Lucid is still in start-up mode, developing the manufacturing and sales platform it needs to compete with already established industry giants. Capital investment requirements are significant, with the company openly telling investors in the third quarter of 2025 that it only has enough cash to fund its operations through the first half of 2027. This has been presented as a positive, but for all but the most aggressive investors it should probably be a warning sign.

The glass half empty is that Lucid is a loss-making company, with only six quarters of cash remaining on its balance sheet. What happens if it can’t find new investors to provide the capital it needs to continue growing its business? The answer is not positive, which probably explains why the stock has been on a steady downward trajectory for several years.

Lucid’s stock price currently sits just above $10 per share. However, investors should take this price with a grain of salt. Indeed, at the end of August 2025, Lucid adopted a 1 for 10 reverse stock split. A reverse split does not change the percentage of a company owned by a shareholder, but it has the effect of increasing the stock price.

Normally, companies do reverse stock splits because their stock prices have fallen so low that they risk being delisted from a stock exchange. If you do the math here, Lucid would be less than $1 per share if it hadn’t done the reverse stock split. This is the level at which shares are generally at risk of being delisted.

Delisting makes it much more difficult for a company to access capital markets to obtain new liquidity. However, the low share price is also an obstacle, which partly explains the company’s preemptive decision to carry out a reverse stock split.

There’s just one small problem: The business remains the same, and investors are concerned about Lucid’s ability to generate a sustainable profit. The stock has fallen another 49% since the stock split on August 29 of last year. Wall Street is making it very clear that it thinks Lucid’s future is murky at best.

A significant problem is that competition in the electric vehicle sector today is intense, with all major automakers competing in the product niche, in addition to a few purely successful electric vehicle manufacturers. Lucid is making significant commercial progress, but the 18,378 vehicles produced in the fourth quarter of 2025, despite a 104% year-over-year increase, still represent just a drop in the bucket compared to its larger competitors. The company is far from a major competitor in an industry where size is vitally important.

It’s normally a bad sign when a company does a reverse stock split. Given Lucid’s continued losses, limited capital, and modest business size, most investors should probably view the reverse stock split and subsequent share price decline as a warning. Only the most aggressive investors should consider owning Lucid, and even then, great caution should be exercised.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Motley Fool has a disclosure policy.

Should you buy Lucid stock when it’s at $10 a share? was originally published by The Motley Fool

ahsan65@gmail.com5 hours ago

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