Is Lucid Motors Stock Being Shorted?
Lucid Motors stock is down 70% YTD as the company aggressively scales production and deliveries of the Lucid Air electric var.
Shorts sellers have targeted LCID stock due to its elevated P/S ratio and high cash burn. Many Lucid bulls are wondering if the shorts are manipulating the stock price to tank LCID stock.
Is Lucid Motors Stock Being Heavily Shorted?
According to Fintel, LCID’s short interest is 21% or ~127 million shares shorted. Short sellers have bet against the entire EV and Lucid Motors is the #1 target out of the large-cap EV stocks.
Lucid’s short interest exceeds all of its competitors so it’s safe to say that Lucid Motors is a heavily shorted stock
Top EV Stocks by Short Interest
| Company | Short Interest (As of 11/2022) |
|---|---|
| Lucid Motors | 21% |
| Tesla | 2.3% |
| Rivian | 10% |
| Nio | 4.41% |
Why Lucid Motors Stock is Heavily Shorted
Lucid Motors has significant negative free cash flow and lost over $1 billion so far in 2022. The company continues to burn through cash and Lucid could be at risk of bankruptcy if free cash flow doesn’t improve.
However, Lucid Motors will probably continue raising cash through stock offerings to stay in business. That’s why short sellers are betting so heavily against LCID stock. They are confident that further dilution will crash the stock price.
The only solution to Lucid’s short-seller problem is to become profitable. That’s when the shorts will back off and find another stock to target. Lucid could be profitable by 2025, which means the next few years may be a tough ride.
Lucid Motors Stock Could Short Squeeze If The Company Becomes Profitable
With such a high short interest, LCID short sellers must buy back the stock to cover their short position. If Lucid reverses its cash burn and turns a profit, short sellers may cause an epic short squeeze.
|
|
|
|
|
|
|
|
Fees:
$0
|
Fees:
$0 (65 cents per options contract)
|
Fees:
$0
|
|
Account Minimums:
$0
|
Account Minimums:
$0
|
Account Minimums:
$0
|
|
Promotion:
Up to $600 in Transfer Bonuses
|
Promotion:
$100 for New Accounts
|
Promotion:
Up to 12 free stocks valued $30,600
|
In 2022, Tesla stock short squeezed often due to its crazy high short interest. Short sellers got too greedy and lost $40 billion when Tesla became profitable. TSLA stock started soaring and the shorts were forced to buy back TSLA stock at huge losses.
I believe Lucid will be like Tesla and follow in similar footsteps as the company grows revenue and scales production.
Conclusion
It’s difficult to watch LCID stock get crushed by greedy short sellers who want the company to fail. Lucid Motors produces the best EV on the planet but cannot catch a break right now.
Lucid’s high short interest is helping to keep the stock price down so don’t be too discouraged. As long as Lucid Motors executes, LCID shareholders have nothing to worry about in the long run.
