Here's How to Play Lucid Stock After Disappointing Q4 Results

California-based electric vehicle (EV) company Lucid Group LCID posted fourth-quarter 2025 loss per share of $3.62, wider than the Zacks Consensus Estimate of $2.49 as well as $2.20 incurred in the corresponding quarter of 2024. This was largely due to high costs and expenses, which totaled $1.58 billion in the quarter under review, up from $967 million in the prior-year period. Cost of revenues more than doubled, research and development expenses were up 29% and selling, general and administrative costs inched up 15% year over year.

However, fourth-quarter 2025 revenues of $522.7 million surpassed the Zacks Consensus Estimate by 13.27% and more than doubled from the fourth quarter of 2024. Full-year 2025 revenues also jumped 67% to $1.35 billion. The company’s production doubled in 2025. Deliveries for the full year also grew 55% to 15,841 units. Meanwhile, its closest peer Rivian Automotive RIVN delivered 42,247 vehicles last year, down 18% year over year.

So, how should investors approach Lucid stock after this mixed quarter? While the headline loss raises concerns, the company’s production outlook and product pipeline offer some counterbalancing positives. Let’s discuss.

Lucid Group, Inc. Price, Consensus and EPS Surprise

Lucid Group, Inc. price-consensus-eps-surprise-chart | Lucid Group, Inc. Quote

Production Momentum, But Profitability Still Elusive

Lucid has guided production of 25,000-27,000 units for this year, marking a year-over-year uptick of 40-50%. Lucid Gravity SUV is set to account for a major chunk of the production and sales this year, followed by the Lucid Air sedan. The company is also on track to begin the production of its midsize platform later this year, with the first SUV from the platform starting at a price tag of $50,000.

However, growth will come at a cost. While gross margin improved roughly 18 basis points sequentially in the fourth quarter of 2025 and showed year-over-year improvement in the full year, it remains well below long-term targets. Management expects continued sequential gross margin improvement in 2026 and slower operating expense growth, but losses are likely to persist. Discouragingly, Lucid hasn’t provided any clear timeline as to when it’s likely to get profitable.

Cost Cuts Amid Industry Headwinds                                  

To streamline operations and improve margins, Lucid recently announced plans to cut 12% of its U.S. workforce. The move is expected to generate around $500 million in cost savings over the next three years.

The decision reflects broader EV industry challenges. The withdrawal of U.S. federal EV tax credits has slowed adoption, while shifting demand trends have created pricing uncertainty. Tariffs remain a cost overhang, and Lucid also cited supply chain disruptions — including magnet chip shortages and a fire at a key supplier’s facility — as additional production hurdles.

Although the company has reduced material costs for the Gravity and Air models, these external pressures complicate execution in the near term.

Cash Burn Remains a Key Concern

Lucid ended 2025 with about $4.6 billion in liquidity, which management believes provides runway into the first half of 2027. Free cash flow was negative $3.8 billion in 2025, worsening from negative $2.9 billion the previous year. The deterioration was largely due to ramp-related operating losses.

Operating losses and negative free cash flow underscore that Lucid remains in heavy investment mode. For 2026, capital expenditures are projected at $1.2-$1.4 billion, up from $868 million in 2025. Spending on R&D, marketing, midsize vehicle development, and autonomy initiatives will continue to weigh on near-term financial performance.

Robotaxi Ambitions Come With Execution Risks

Lucid is also positioning itself for the autonomous ride-hailing market. The company partnered with Uber Technologies UBER and Nuro to develop robotaxis powered by Nuro’s Level 4 autonomous system for deployment on Uber’s global platform. The agreement includes plans to deploy at least 20,000 vehicles over time and a $300 million equity investment from Uber, which closed in the third quarter.

On-road testing began in the San Francisco Bay Area in the fourth quarter, with initial commercial rollout expected later this year. Lucid is targeting Level 3 autonomy by 2028 and Level 4 by 2029, starting with its midsize vehicles.

While the partnership expands long-term revenue potential, it also introduces execution risk. Regulatory approvals, safety validation and fleet readiness are critical milestones — and many of these factors are outside Lucid’s direct control.

Price Performance, Valuation & Estimates for LCID

Over the past six months, shares of Lucid have handily underperformed the industry. Meanwhile, Rivian has gained 15% over the same timeframe.

LCID carries a Value Score of F. It is trading at a forward sales multiple of 1.26, below the industry’s 3.34, reflecting operational and financial challenges. Rivian has a P/S ratio of 2.45.

The Zacks Consensus Estimate for LCID’s 2026 loss per share widened by 4 cents in the last 60 days to $9.04.

Our Take: Avoid LCID

Lucid’s top-line growth and production ramp are encouraging, and the Gravity launch plus midsize platform could broaden its market reach. However, widening losses, elevated cash burn, heavy capital spending and ongoing industry headwinds limit near-term visibility.

With the stock currently carrying a Zacks Rank #4 (Sell), risk-reward appears skewed to the downside. Until Lucid demonstrates sustained margin improvement, reduced cash burn and clearer progress toward profitability, the stock may be best avoided.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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