The Lucid stock price jumped by more than 3% on Wednesday as investors bought the dip in most stocks. The LCID shares are trading at $22.77, which is about 11% above its lowest level this week. Still, it is about 60% below its highest level in 2021, bringing its market cap to about $37 billion.
Lucid Motors and other electric vehicle companies have been under pressure in the past few months as worries about valuations and costs rise. For example, the Tesla stock price has crashed by more than 10% in the past three months. Similarly, Nio shares have tumbled by over 43% while Xpeng have dropped by 40%.
The main reason why the Lucid stock price has crashed is the feeling that the company has become extremely overvalued. For one, this is a company that is just starting its production line that was being valued at more than $50 billion. The same case applies to other EV companies like Rivian and Li Auto.
Second, there are concerns about the rising cost of doing business. The crisis in Ukraine has pushed most commodity prices significantly higher. For example, nickel prices have more than doubled. As a result, companies like Tesla and Rivian have resulted to hike in prices, which could affect demand. Other reasons why the Lucid stock has retreated are the ongoing investigation by US regulators and the decision by the Fed to hike interest rates. Also, a recent Lucid Air recall is not helping. Historically, loss-making companies tend to underperform in a period of high-interest rates.
Lucid stock price forecast
The daily chart shows that the LCID stock price has been in a strong bearish trend in the past few weeks. This trend has been supported by the descending trendline that is shown in black. It is also below the 25-day and 50-day moving averages, signaling that bears are still in control.
Therefore, for now, the bearish trend will likely continue as bears target the next key support level at $16.20, which was the lowest level on September 1 last year. The bearish trend will continue as long as it is below these moving averages.