Lucide Group (LCID) has had a rollercoaster ride in its limited history. It started by producing a high-quality electric sedan (EV), but continually disappointed investors with production problems and disappointing deliveries. This has changed recently and Lucid has gained momentum while rivals such as Rivian Automobile (NASDAQ:RIVN) face their own production problems.

Let’s take a look at the changing dynamics and two things that could put the company facing a speed bump.

Momentum

About a year ago, Rivian arguably had more momentum than any EV maker, while Lucid continued to disappoint investors. But through 2024, the dynamic slowly shifted in Lucid’s favor as Rivian’s shipments stopped and Lucid began posting quarterly records.

Specifically, Rivian saw a 36% drop in deliveries during the third quarter and reduced its production guidance from 57,000 vehicles to 47,000 to 49,000 vehicles. Meanwhile, Lucid saw a 91% increase in deliveries in the third quarter – helped by hefty incentives – which marked the third consecutive quarter of record delivery figures for the electric vehicle maker.

While this change in dynamics is good news for Lucid investors, several factors have slowed this momentum recently.

Speed ​​bumps

The first speed bump came in the form of Lucid announcing that it expects a larger-than-expected loss in the third quarter. Lucid warned investors that it now expects a third-quarter operating loss of between $765 million and $790 million, larger than the $752 million loss analysts expected, according to FactSet.

The second speed bump comes in the form of further shareholder dilution. Lucid announced plans to sell more than 260 million shares in a public offering. If the public offering is completed, it will sell nearly 375 million shares to its majority shareholder, the Saudi Public Investment Fund (PIF). You can see previous levels of shareholder dilution below.

Outstanding LCID Shares data by Y charts.

What it all means

While shareholder dilution and a larger-than-expected third-quarter loss have sent the stock price down nearly 27% over the past month, long-term shareholders can take these speed bumps with a grain of salt . We knew Lucid was experiencing massive losses and we knew it would need to raise capital at some point. Creating a start-up in the automotive world is an expensive and difficult process.

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

These two speed bumps also remind investors that Lucid is a highly speculative and volatile stockwith significant stock price fluctuations, and should remain a smaller position in your portfolio.