Should You Buy Lucid Stock Ahead of Its 1-for-10 Reverse Stock Split?

Group 1 - Lucid Group is implementing a reverse 1-for-10 stock split, effective August 29, which often indicates financial trouble for a company [1][2] - The stock price has fallen over 30% since the announcement of the reverse split on July 17, and the current market capitalization is approximately $6.3 billion [1][3] - The reverse split is intended to maintain share prices above internal minimums set by institutional buyers, rather than to meet Nasdaq's $1 minimum listing requirement [2][3] Group 2 - Historically, stocks undergoing a reverse split tend to experience a price drop, including an immediate decline and a subsequent downward drift over the following months [5][6] - Lucid's reverse split may lead to the liquidation of odd share lots, which could further contribute to downward pressure on the stock price [6] - A similar situation occurred with Canoo, which experienced a 7% drop on the day of its reverse split and continued to decline over the following weeks [7] Group 3 - In its latest earnings report, Lucid reported a larger-than-expected loss and reduced its production forecast for the year from about 20,000 vehicles to 18,000 to 20,000 vehicles [8] - The expiration of the $7,500 federal EV tax credit on September 30 is expected to negatively impact EV sales, indicating a challenging second half of 2025 for the U.S. EV industry [8] - Despite some positive developments, such as a partnership with Uber and a 38% year-over-year increase in vehicle deliveries in Q2, Lucid remains unprofitable and is behind on production targets for its Gravity SUV [9][10]