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Electric luxury sedan maker Lucid Group (LCID 4.79%) reported its fourth-quarter and full-year 2022 production results this morning, and the stock popped almost 7% at the market open. As of 10:40 a.m. ET, Lucid shares were still up by 5%.
Lucid produced almost 3,500 electric cars in the fourth quarter to reach a total of 7,180 for the full year. That beat the company’s most recent projection for 6,000 to 7,000 vehicles to be produced in 2022. That estimate had been lowered twice, though.
The original estimate entering the year was for Lucid to make 20,000 of its Air sedans. Supply chain problems and difficulties ramping up production forced the company to lower expectations as the year progressed. But investors are looking at the accelerated pace of production in the fourth quarter, and the stock is rising today.
Image source: Lucid Group.
The stock jumping on the data isn’t surprising since the share price has dropped more than 80% in the last year. But many risks remain for the company and its shareholders. Clearing a twice-lowered bar for production shouldn’t be considered overly positive news. But the production volume in the fourth quarter does indicate that the company has taken an important step toward the production levels it will need to succeed over the long term.
The more important news for investors will come when Lucid reports its fourth-quarter financial update. One item to watch is the reason the company delivered fewer than 2,000 of the nearly 3,500 vehicles it made in the fourth quarter. If it is simply a logistics issue and the cars are heading to customers awaiting delivery, there won’t be added concerns.
But the company reported a drop in reservations when it announced its third-quarter results. If production exceeded deliveries because customers canceled reservations, it would be a red flag. That information and the updated reservation numbers are what investors will need to watch.
Howard Smith has positions in Lucid Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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