Lucid Stocks Don Break Down Like Food We No Chop!

City, State/Country – Na wetin we dey hear today? Lucid, the electric car company wey sabi style, don dey face gbege for stock market! Just look am, their stock don drop 35.3%, now e dey trade around $16.96. Shareholders dey shake head, no be small (who go like make money loss like dat?).

Wetins cause dis wahala? Na their last quarterly results wey no meet expectation. Investors dey think am twice before them drop their money for Lucid again. Abeg, wetin be the next move? Buy now or run comot? (If you ask me, I no fit answer, but I sabi say e dey tough!)

One big issue wey dey vex investors na say Lucid gats strong margins. When company dey sell goods like fine goods wey dey chop money each time person buy am, e dey create good operating profits. But Lucid be automobile manufacturer, no be dem dey collect money for the first sale, instead na servicing and parts later. Dem dey lose out on the after sale (no be small wahala dem dey face).

For the past five years, dem don run average negative 148% gross margin. Na as e be! (If na me, I no go fit sleep well for night o!). Free cash flow be like ghost for their financials. Dem don burn through $3.38 billion cash in the last year. And guess wetin? Dem get only $2.34 billion cash for their balance sheet. Na eight months runway dem get left if dem no go borrow money quick quick, and talk of their $2.12 billion debt! (Na wa o, wetin dem dey use all dis money do?)

As e be so, if Lucid no quickly improve wetin dem dey do, dem fit find self needing capital from investors to keep life going. But na wetin go happen to investor shares if dem lose value wey dey raise. We dey tip-toe around Lucid until we fit see consistent free cash flow or better financing plans wey fit gather their business together.

Now, the latest gist wey don drop na when Stifel bring down Lucid’s price target from $21 to $17. Dis one, e just make am worse for dem. Investors dey fear say Lucid go need more money again (like when person finish party food and need corn!).

Every time dem show signs of improvement, market dey run after dem. E no dey surprise if Lucid go need fi raise cash now. Stifel still maintain ‘Hold’ rating, but dem dey believe say Lucid technology dey strong—just say the money matter dey worry dem too.

The stock market fit dey overreact from news, sometimes price drops fit turn to opportunity to buy strong stock. But wetin we fit say about Lucid? As e dey so, dey don dey down 56.4% since beginning of year. For dem wey buy $1,000 shares five years ago, na just $136 dey remain, wahala no go end like dis o!

As news of US-China trade tensions dey hot, e dey caused trouble for stocks again. But some bank earnings dey rise sharply. Na only one small shine we fit see for this cloudy sky. If you wan buy strong stocks, make you check well. Lucid no go fit hold ground if dem no change wetin dey happen inside dem structure.

Hopefully, dem go find better way to manage their money. But for now, stock market fit still dey gree dance, just dey watch as Lucid dey fall like banana.