When trading with the Lucid Group, pay attention to the key level of resistance

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Based in California electric vehicle manufacturer Lucid group (NASDAQ:LCID) wants to disrupt the market with cars that look amazing and provide exceptional power and range. It’s exciting, but it hasn’t always been easy to have LCID stocks.

Source: T. Schneider / Shutterstock.com

Don’t get me wrong – there were some good moments in 2021. Among the highlights was when Lucid Group joined prestigious Nasdaq 100 index in December.

On the other hand, there were also frustrating times, for example, when LCID shares fell by 50% in early 2021. When that year ended, it seemed like there could be a similar downturn.

Today, however, Lucid’s shareholders are undoubtedly happy to follow the return of the share. While a turnaround is definitely welcome, it’s important to keep your enthusiasm from turning into greed.

A closer look at LCID stocks

In the exciting days of early 2021, LCID shares returned from $ 22 to $ 60 and back. At the time, the stock was better suited for short-term trading than for the buy and hold position.

Fast forward to the fourth quarter of 2021 and buyers raised Lucid’s share price to $ 60 again. As they say, the market is not necessarily repetitive, but it sometimes rhymes.

In December, it looked like LCID shares would fall to $ 20 again – but that didn’t really happen. Luckily, customers rushed in and held stock for $ 40.

In fact, the stock rose in early January, so a full recovery may be underway. If you decide to invest now, it’s not a scary idea to make a profit at $ 60.

Remember, the idea is to buy low and sell high, not buy stocks at resilience points and then learn the lesson the hard way.

European enlargement

Before we move on to more warnings, we can first announce the good news.

Not long ago, Lucid tweeted some nice looks photographs (probably) the leading vehicle of Lucid Air. Someone tweeted in response question, “Are they in the UK?”

To this, Lucid replied: “Expansion into European markets will begin this year. Keep track of country-specific shipping information. “

Interestingly, and perhaps unexpectedly, the Lucid Group would have decided to publish this notice via social media instead of via an official press release.

But hey, now Lucid’s European fans have at least an idea of ​​what to expect. This is actually an update of the company on the current story as Lucid started accepting online reservations January 2020 in 15 European countries for Air.

At the time, Lucid did not specify when these vehicles would be delivered. So, the tweet mentioned above at least provides some clarity on this matter.

Check your finances

Delivery of cool looking cars is one thing; the profit from these supplies is a whole other thing.

When you listen to the chat about Lucid on social media – including many responses to the tweet mentioned above – it is a clear impression that some people are exaggerating with LCID shares.

This is not the best way to invest in the Lucid Group or in the EV revolution in general. This is still a relatively new technology, and Lucid has yet to prove that it will be a profitable company.

I hate being the bearer of bad news, but the Lucid Group has moved away from profitability, not to it. Consider this: in the nine months ending September 30, 2020, Lucid suffered loss of net profit $ 408.1 million

Over the same period in 2021, the net loss of Lucid Group earnings rose to a staggering $ 1.53 million.

Therefore, Lucid’s investors should closely monitor future reports on the company’s profits. Read the fine print and focus on the end results.

Bottom line

Sometimes it can be tempting to get caught up in hype and excitement. However, buying stocks at key levels of resilience can be a costly mistake.

Lucid produces cars that look great and perform well, there is no denying that. However, the company still needs to prove its fiscal capacity.

In the final analysis, it is okay to take a long-term position in LCID shares. Just don’t be greedy if the share price returns to $ 60, and understand that every position in the Lucid Group is very speculative.

On the day of publication David Moadel did not hold (directly or indirectly) any positions in the securities referred to in this Article. The opinions expressed in this article are those of the author and are the subject of InvestorPlace.com Guidelines for publication.

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