Lucid Group (LCID) It has had quite a bumpy ride throughout its limited history. It started producing a high-end sedan electric vehicle (EV) but continually disappointed investors with production glitches and disappointing deliveries. This has changed recently, and while Lucid is gaining momentum as rivals Rivian Automotive (NASDAQ:RIVN) they deal with their own production barriers.

Let’s take a look at the shifting momentum and two things that could cause the company to hit a speed bump.

acceleration

About a year ago, Rivian was arguably gaining more momentum than any other EV maker, while Lucid continued to disappoint investors. But by 2024, momentum slowly shifted in Lucid’s favor as Rivian’s deliveries stopped and Lucid began publishing quarterly records.

More specifically, Rivian reported a 36% decline in deliveries in the third quarter and lowered its production target from 57,000 vehicles to 47,000 to 49,000 vehicles. Meanwhile, Lucid reported a 91% increase in third-quarter deliveries, helped by some strong incentives, marking the third straight quarter of record delivery numbers for the EV maker.

While the change in momentum is good news for Lucid investors, a few things have slowed that momentum recently.

speed bumps

The first speed bump came as Lucid announced it was expecting a larger-than-expected loss in the third quarter. Lucid warned investors that it expects an operating loss of $765 million to $790 million in the third quarter, larger than the $752 million loss analysts expected, according to FactSet.

The second acceleration comes in the form of further dilution of shareholders. Lucid announced plans to sell more than 260 million shares through an initial public offering. If the IPO is completed, it will sell approximately 375 million shares to its majority shareholder, the Public Investment Fund of Saudi Arabia (PIF). Below you can see previous levels of shareholder dilution.

Outstanding LCID Shares data YCharts.

What does all this mean?

While shareholder weakening and a larger-than-expected loss in the third quarter sent stock prices tumbling nearly 27% last month, long-term shareholders may be a bit skeptical of these pace increases. We knew Lucid was posting large losses and would need to raise capital at some point. Establishing a young company in the automotive world is an expensive and challenging process.

What long-term investors should focus on is how the company will handle its upcoming Gravity SUV EV launch and how its initial production and deliveries will ramp up over the next few months. The Gravity SUV is also just the next step. The EV maker plans to launch a midsize crossover priced below $50,000 before delivery in about two years.

These two speed bumps also remind investors that: Lucid is a highly speculative and volatile stockWith fairly large stock price swings, it should remain in a smaller position in your portfolio.