LCID Short Squeeze: 7 Reasons Lucid Stock Could Reach $50
Many of you enjoyed my previous article on the upcoming NVAX short squeeze so I’m following up with an update on the potential for a Lucid stock squeeze.
As a long-time holder of Lucid stock since the CCIV SPAC, I must admit it’s been a REALLY rough time for the company.
LCID stock is down 11% YTD while the NASDAQ QQQ ETF is up 34% YTD.
Is It Worth HODLing LCID stock anymore?
Well, the good news is that the company has over $5 billion in cash on hand plus recently launched its 2nd EV production factory called AMP-2 in Saudi Arabia on September 27th.
The bad news is that short sellers have targeted LCID shares and contributed to the massive drop in share price. When Tesla CEO Elon Musk said that Lucid could go bankrupt in the future, a lot of short sellers began dumping LCID shares.
However, the market isn’t always right and I’m predicting a massive LCID short squeeze in 2024. Here’s why…
7 Reasons Lucid Stock Could Hit $50 After The Short Squeeze
1. Lucid Stock is the 2nd Most Shorted EV Stock on the NASDAQ
LCID has a 23.65% short interest, making it a key target for a short squeeze. It’s also the 2nd most heavily shorted EV stock behind Fisker (FSR).
2. 2023 Price Cuts Could Cause a Surge in Demand
Lucid followed EV makers like Tesla and dropped the price of its Lucid Air to create higher demand. Lucid CEO Peter Rawlinson said the price cuts worked but we won’t know the effects until Q3 2023 earnings report on November 13th, 2023.
3. The AMP-2 Factory in Saudi Arabia Is the Only EV Facility in the Country
Saudi Arabia is the growing robust economy with a keen desire for EV vehicles. Lucid operates the only electric car factory in the country thanks to 100k EV order from the Kingdom of Saudi Arabia.
4. Advances in EV Battery Technology Will Improve Margins
EV battery costs are falling and could continue trending down in the future, which helps Lucid improve margins and reach profitability much faster.
5. Lower Interest Rates Could Help Lucid Break Even in 2024
Interest rates wreaked havoc on consumer spending but Fed Chair Jerome Powell may cut interest rates in 2024.
6. Lucid’s First Positive EPS Quarter Will Cause a Massive Short Squeeze
Back in 2019, I posted articles and made videos urging investors to invest in Tesla stock before the company turned a profit in 2020. Once Tesla reach profitability, TSLA shares 10x’ed within the next 2 years.
I truly believe Lucid could be like Tesla 2.0 and soar in value once the bottom line turns black.
7. Bagholders Will Dump Lucid Stock at $50
Don’t expect the LCID short squeeze to last forever because bagholders are still holding LCID shares when Lucid stock was over $50.
$50 is a key resistance level where sellers will attempt to break even but that’s okay since LCID stock is under $6 right now.
Risk Factors
- Cash Burn: Lucid maintains a high cash burn rate that’s causing massive losses. If things don’t improved then Lucid must dilute shareholders to stay in business.
- Higher Interest Rates: If Fed Chair Jerome Powell continues raising interest rates then consumer won’t be able to afford luxury EV cars.
My Gameplan for LCID Stock
I jumped back into LCID stock around $5, which is cheaper than the most recent PIF investment price.
Don’t expect the short squeeze to happen overnight. It may take several quarters for LCID stock to make a big move.
Lucid is a long-term hold that should pay off for patience investors. Sell covered calls to generate income while you wait for a better economic environment and Lucid’s first positive GAAP quarter.
