Lucid (LCID)

Luxury electric car manufacturer Lucid (NASDAQ:LCID) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 68.3% year on year to $336.6 million. Its non-GAAP loss of $2.65 per share was 19.4% below analysts’ consensus estimates.

Company Overview

Founded by a former Tesla Vice President, Lucid Group (NASDAQ:LCID) designs, manufactures, and sells luxury electric vehicles with long-range capabilities.

Much capital investment and technical know-how are needed to manufacture functional, safe, and aesthetically pleasing automobiles for the mass market. Barriers to entry are therefore high, and auto manufacturers with economies of scale can boast strong economic moats. However, this doesn’t insulate them from new entrants, as electric vehicles (EVs) have entered the market and are upending it. This has forced established manufacturers to not only contend with emerging EV-first competitors but also decide how much they want to invest in these disruptive technologies, which will likely cannibalize their legacy offerings.

Lucid's competitors in the electric vehicle market include Tesla (NASDAQ:TSLA), Rivian (NASDAQ:RIVN), Porsche's Electric Division (XETRA:PAH3), and Mercedes-Benz Group's EV Division (OTC:MBGAF).

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Lucid’s sales grew at an incredible 341% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Lucid’s annualized revenue growth of 23.7% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

Lucid also reports its number of units sold, which reached 4,078 in the latest quarter. Over the last two years, Lucid’s units sold grew by 48.1% annually. Because this number is better than its revenue growth, we can see the company’s average selling price decreased.

This quarter, Lucid achieved a magnificent 68.3% year-on-year revenue growth rate, but its $336.6 million of revenue fell short of Wall Street’s lofty estimates.

Looking ahead, sell-side analysts expect revenue to grow 131% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and indicates its newer products and services will fuel better top-line performance.

Lucid has bad unit economics for an industrials business, signaling it operates in a competitive market. This is also because it’s an automobile manufacturer.

Automobile manufacturers have structurally lower profitability as they often break even on the initial sale of vehicles and instead make money on parts and servicing, which come many years later - this explains why new entrants whose fleets are too young to generate substantial aftermarket revenues have negative gross margins. As you can see below, these dynamics culminated in an average negative 148% gross margin for Lucid over the last five years.

This quarter, Lucid’s gross profit margin was negative 99.1%. The company’s full-year margin was also negative, suggesting it needs to change its business model quickly.

Lucid’s high expenses have contributed to an average operating margin of negative 448% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, Lucid’s operating margin rose over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

This quarter, Lucid generated a negative 280% operating margin.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although Lucid’s full-year earnings are still negative, it reduced its losses and improved its EPS by 21.1% annually over the last two years.

In Q3, Lucid reported adjusted EPS of negative $2.65, up from negative $2.80 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Lucid’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 485%, meaning it lit $484.96 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that Lucid’s margin expanded during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

Lucid burned through $955.5 million of cash in Q3, equivalent to a negative 284% margin. The company’s cash burn increased from $622.5 million of lost cash in the same quarter last year.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Lucid burned through $3.38 billion of cash over the last year. With $2.34 billion of cash on its balance sheet, the company has around 8 months of runway left (assuming its $2.22 billion of debt isn’t due right away).

Unless the Lucid’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Lucid until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

We struggled to find many positives in these results. Its revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 2.6% to $16.77 immediately following the results.

Updated: December 3, 2025 at 10:30 PM EST

Before deciding whether to buy Lucid or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Lucid is a pretty good company if you ignore its balance sheet. For starters, its revenue growth was exceptional over the last five years. And while its operating margins reveal poor profitability compared to other industrials companies, its rising cash profitability gives it more optionality. Additionally, Lucid’s expanding operating margin shows the business has become more efficient.

Lucid’s forward price-to-sales ratio is 1.8x. Despite its notable business characteristics, we’d hold off for now because its balance sheet concerns us. Interested in this company and its prospects? We recommend you wait until its debt load falls or its profits increase.

Wall Street analysts have a consensus one-year price target of $18.43 on the company (compared to the current share price of $13.52).