Despite Lucid's stock plunge, here's why I see a bright future for the company

Lucid Group's stock is down over 15% in the last five days. The company is planning on raising more money by selling shares, something no investors want to see happening.

The stock's performance since the start of 2022 has been poor, with a consistent slide downwards bringing the stock from $42 to today's $2.78.

The slump hasn't happened without valid reasons. The company's business model continues to be questioned despite its technology impressing consumers. Making a good product is one thing.

Selling it to the masses is another. Lucid is struggling to be in a position where it can scale its operations and achieve profitability.

But not all is doom and gloom for the company. Here is why I believe there's enough juice in the company's potential to merit a bit more optimism then we find in the market concerning Lucid stock.

Lucid stock: Saudis won't mind spending money

Lucid's chances of turning a profit are slim in the short term. This is why nobody wants to go anywhere near the stock.

The company isn't expected to post a positive free cash flow till 2028.

But let's not forget that it took Tesla 17 years to turn a profit.

Elon Musk burnt through enormous amounts of cash to scale his company's operations.

Lucid is in a similar boat, albeit with a product that many claim is better than Tesla's.

It's just that in light of Tesla's dominance in the industry, investors aren't willing to bet on Lucid the same way they were willing to bet on Tesla.

The company's majority shareholder, Saudi Arabia's Investment Fund, wants to purchase a further 374 million shares of the company to maintain its 58.8% holding percentage.

This decision comes as the company has decided to sell 262.44 shares to raise funds, which has sent its stock crashing 15% today.

Saudis won't mind having to spend this amount of money to keep the company alive in the hope that the company will eventually turn profitable.

Lucid Group knows this, which is possibly why it is taking its time to scale operations without worrying about profits.

If any company had the backing of the Saudis, it would take its time to get to its destination. Funding may be a big worry for the company's investors, but its quite likely the management has assurances from its largest stakeholder.

Lucid stock: high short interest and peak pessimism

LCID stock had a great rally in the first half of the year when its stock almost doubled from its April lows.

These rallies have become more common, suggesting shorts aren't always in control.

But the 28% short interest does suggest that a lot of traders continue to bet against the company.

This shows the pessimism that the stock is surrounded by at the moment.

However, this same short interest could become the eventual driver of a bull rally once things improve.

The company missed its production estimates in the third quarter but the deliveries came in at 2781 vehicles, beating analyst estimates by a whopping 30%.

This again proves that people are willing to buy the company's product, but the company just isn't able to scale the production. This should improve with time.

Lucid needs to produce 3300 vehicles this quarter to achieve its annual guidance. That target may not be achieved, but the market is possibly already pricing that in.

With increased demand, the sales figures should continue to stay strong, making the stock worth buying at current levels.