Lucid Stock (LCID): Morgan Stanley Sees ‘Strategic Opportunities' in Uber Deal Ahead of Q2 Results
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Following the news, Top Morgan Stanley analyst Adam Jonas reiterated a Hold rating on Lucid with a $3.00 price target. Four-star analyst Adam Jonas believes the Uber-Nuro deal shows that Lucid is expanding its focus beyond EVs and starting to pursue 'AI-enabled autonomy' through strategic partnerships.
Analyst Sees Long-Term Value in the Uber Deal
Jonas highlighted Lucid's upcoming Gravity SUV as a key part of the company's next growth phase. He believes the deal shows Lucid's potential to play a bigger role in the AI and self-driving space.
As part of the deal, Uber will invest $300 million in Lucid. While the amount is relatively small compared to Lucid's ongoing cash needs, Jonas believes it could provide short-term support as Lucid works to ramp up Gravity production.
Although Morgan Stanley remains cautious on the stock, the firm views the deal as an important step that could lead to more partnerships in AI, EV technology, and global markets, helping Lucid strengthen its position in the fast-growing autonomous driving space.
What's Ahead for Lucid Stock?
Looking ahead into the Q2 earnings season, Wall Street forecasts a Q2 2025 loss of $0.22 per share, an improvement from the $0.34 per share loss in the same quarter last year. Meanwhile, revenues are expected to rise by 41% from the same quarter last year, reaching $283.2 million, according to data from the TipRanks Forecast page.
Investors will be watching closely for updates on Gravity production, spending levels, and any early signs of revenue growth tied to these new partnerships.
Is LCID Stock a Buy?
The stock of Lucid Group has a consensus Hold rating among ten Wall Street analysts. That rating is currently based on one Buy, eight Hold, and one Sell recommendations issued in the past three months. The average LCID price target of $2.70 implies 13.46% downside from current levels.
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BMW, Toyota, and yes, even Hyundai, are all exploring similar 'manual EV experiences.' It's a peculiar about-face: Hyundai publicly says no one wants to shift gears anymore, while secretly prototyping fake ones. Why? Because while most people don't need a manual, some still want the feel of one. The emotional science of driving The Continental Mobility Study (2024) found that a majority of American drivers still see themselves as 'traditional.' They welcome driver-assist systems—lane centering, adaptive cruise, automatic parking—but remain uneasy about surrendering full control. That discomfort fuels both sides of this tech tug-of-war. One side wants to automate every inch of the driving experience. The other is doubling down on connection, feel, and driver engagement—even if that feeling is simulated. Across the Atlantic, the divide looks different. Europe remains the stronghold for manual fans, with 50–70% of new car sales in the EU and UK still coming with clutch pedals. 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Is Lucid's Reverse Stock Split a Sign of Desperation?
Key Points Lucid announced a preliminary filing for a reverse stock split. Typically, reverse stock splits are done by companies in financial distress. Lucid has no immediate threat of being delisted. 10 stocks we like better than Lucid Group › While all the headlines screamed about Uber Technologies' (NYSE: UBER) partnership with Lucid Motors (NASDAQ: LCID) and Nuro, an autonomous driving technology start-up, and the multimillion-dollar investment between them, there was a separate development that nearly everyone overlooked: a potential reverse stock split. Let's take a look at what exactly a reverse stock split does, what it doesn't do, and what it means for Lucid investors going forward. Is this a desperate move? Fair or foul? EV maker Lucid announced Thursday that it filed a preliminary proxy statement with the Securities and Exchange Commission (SEC) regarding a special stockholders' meeting to authorize the board of directors to complete a reverse stock split of the company's Class A common stock at a ratio of 1-for-10 (1:10). Let's break this development down into what it means, and what Lucid hopes to achieve with its potential reverse stock split. A 1-for-10 reverse stock split simply means Lucid will reduce its outstanding shares by a factor of 10, essentially combining 10 old shares into one new share. The stock price will then be multiplied by 10. In the simplest example, a company with 100 shares with a $1 stock price will reverse split into 10 shares, valued at $10 per share. It's important to note what this doesn't do, which is change the value of what investors own. While the stock price changes, proportionally to the reduction in the number of shares, the company's market capitalization will remain the same, as will the investors' voting power and position value. Now to the question on investors' minds: Is this a sign of desperation? Not necessarily, because there are a few reasons that can drive a reverse stock split. It's true that typically a reverse stock split is done by a company in danger of being delisted from major exchanges such as the NYSE or Nasdaq -- both require companies to maintain a minimum share price of $1.00. If a company's stock price falls below that threshold for 30 consecutive trading days, it receives a deficiency notice and is given a set period to raise its price -- perfect for a reverse stock split. But as we know, Lucid is currently trading at roughly $3.15 per share, and its 52-week low was $1.93 per share. 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The premium received was $1.66; hence, the 2.0% yield (i.e., $ 1.66/$80.00 = 0.02075). Today, it's possible to make almost a 3% yield at a strike price with a similar distance below the trading price. More on that below. First, let's look at why UBER looks cheap here. UBER Stock Price Targets FCF-Based Target. My previous price target was based on UBER Technologies' free cash flow (FCF) margins. For example, in Q1, it made $2.25 billion FCF on $11.533 billion in revenue, or a 19.5% FCF margin. That was higher than the Q4 FCF margin of 14.27%, 18.85% in Q3 2024, and 16.08% in Q2. Stock Analysis shows that over the trailing 12 months (TTM), it generated $7.786 billion FCF on $45.38 billion in revenue, or an FCF margin was 17.16%. That was higher than the prior quarter's TTM FCF margin of 15.68%. So, on balance, it seems reasonable to assume that going forward, UBER could make at least an 18.5% FCF margin. Using analysts' next 12-month (NTM) revenue forecasts, UBER could make at least $10 billion in FCF: 0.185 x $54.36 billion NTM revenue = $10.06 billion NTM FCF Using a 4.5% FCF yield metric (i.e., 22.2x FCF) (its TTM FCF yield is 4.1%), here is how that values UBER stock: $10.06b / 0.045 = $223.6 billion market value That is +18% over Friday's market cap of $189.439 billion. In other words, UBER stock is worth +18.0% more at about $107 per share: 1.18 x $90.59 = $106.90 per share P/E Based Target. Historically, UBER stock has traded at 35.4x forward earnings, according to Morningstar's last 3 years' data (i.e., 55.5x 2023, 18.5x 2024, 32.3x current). In addition, analysts now project 2025 earnings per share (EPS) of $2.86 this year and $3.29 in 2026, or $3.08 over the next 12 months (NTM). Therefore, we can estimate its value: $3.08 NTM EPS x 35.4 avg forward multiple = $109.03 price target That is +20.3% over today's price. Analysts' Price Targets. Yahoo! Finance's analyst survey shows an average price target of $96.68 from 54 analysts, and Barchart's survey has a mean price of $100.35. Moreover, Stock Analysis says 34 analysts have an average $99.42 price target, and says 37 analysts have an average of $105.86. As a result, the average analyst price target from surveys is $100.58 per share, which is +11.0% over Friday's close. Summary Price Targets. The bottom line is that using 3 different methods, UBER stock looks around 16.5% undervalued: FCF-Based Target ……….. $106.90 P/E-Based Target ………… $109.03 Analyst-Based Target ….. $100.58 Average Price Target …… $105.50 per share +16.5% upside As mentioned earlier, one way to play this, to set a lower buy-in price and get paid for this, is to sell short out-of-the-money (OTM) put options. Shorting OTM Puts The August 22 expiry period, just over one month from now, shows that the $86.00 strike price put option, which is 5% below Friday's $90.59 close, has a midpoint premium of $2.53 per put contract. That means a short-seller of these puts (i.e., enter an order to 'Sell to Open' 1 put contract) can make an immediate yield of 2.94% (i.e., $2.53/$86.00 = 0.0294). Moreover, for investors willing to take on more risk, the $87.00 strike price put has a midpoint premium of $3.00, or a 3.45% yield (i.e., $3.00/$87.00 = 0.0345). So, in effect, the investor could use a mix of these two put options to make at least a 3.0% yield over the next month. Moreover, the $86.00 strike price put has a low breakeven point: $86 - $2.53, or $83.47, or -7.9% below Friday's closing price of $90.59. That means that even if UBER stock fell to $86.00 over the next month, the investor's actual investment cost would be just $83.47. Note that there is less than a one-third chance of this happening, as the delta ratio is -31%. That chance is based on historical trading volatility patterns in UBER stock. This also provides a good upside to investors, should it eventually reach the average $105.50 price target: $105.50 / $83.47 breakeven = 1.26 -1 = +26% upside Even if the stock does not fall to $86.00, the investor has a good expected return (ER). If this 2.94% yield can be repeated every 34 days for four and a half months (i.e., 34 x 3 times = 136 days, or 4.5x months): 2.94% x 3 = 8.82% expected return (ER) over 4.5 months The bottom line here is that UBER stock looks deeply undervalued. One way to profitably play this is to sell short out-of-the-money (OTM) puts in nearby expiry periods. On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
