Lucid Stock Is Tanking. It Isn‘t About Fundamentals.

Shares of EV maker Lucid were down 10.8% on Tuesday. (Kent Nishimura/Bloomberg)

Lucid stock extended this week’s slide Thursday, marking the third day of steep losses for the electric-vehicle maker. Nothing fundamental happened. Instead, the company completed its one-for-10 reverse stock split earlier this week.

Lucid shares traded as low as $15.25 on Thursday and closed at $16.16, down 3.7%, while the S&P 500 and Dow Jones Industrial Average rose 0.8%. The stock had tanked 11% Tuesday and another 5% on Wednesday.

The initial Tuesday drop was not accompanied by a news release or Wall Street report, although CFRA analyst Garrett Nelson, on Tuesday, adjusted his price target to $10 a share from $1 to account for the split. He rates shares Sell.

Traders sometimes see reverse stock splits as a sign that a share price will fall further, just as they see traditional stock splits as a source of upside.

Traditional stock splits are supposed to signal to investors that management sees additional gains in the future, which might be true, but splits are pretty standard for most businesses. Microsoft has split shares nine times, beginning in 1987.

The average price of a share in the S&P 500 is about $228. More than 50% of the stocks in the S&P 500 fall between $100 and $500. To be sure, there are outliers. Berkshire Hathaway Class A shares trade just north of $750,000 each. Berkshire B shares trade for about $500.

As for Lucid, shares peaked in February 2021 at a split-adjusted $648.60. Tuesday’s price represented an all-time low for shares.

In 2021, investors were much more optimistic about EV start-ups. Back then, Wall Street projected Lucid’s sales for 2025 would be roughly $15 billion on a volume of roughly 100,000 EVs. Lucid is on track this year to generate $1.3 billion in sales on a volume of about 15,000 cars, according to Bloomberg.

An upcoming fundamental data point for investors to weigh will be third-quarter earnings, due in November. Analysts are looking for a per-share loss of $2.41 from sales of $385 million.

Wall Street might change ratings or price targets between now and then. Overall, only one out of 16 analysts covering the stock rate shares Buy, according to Bloomberg. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Lucid stock is about $23.

Write to Al Root at allen.root@dowjones.com