Now down to the mid-$20s per share, if you don’t own it yet, you may have an urge to “buy the dip” with Lucid Group (NASDAQ:LCID). After all, the EV maker is charging ahead with its production ramp-up plans. A speedy recovery for LCID stock is just around the corner, right?

Maybe, maybe not. If it exceeds expectations on its earnings and guidance updates on Feb 28, there may be room for it to see a partial recovery in price. Say, a spike back up to the high-$20s, or low-$30s, per share. Then again, it could instead report underwhelming 2021 delivery numbers. Updates to guidance could result in the market being less confident that it hits its 20,000 vehicle delivery goal for 2022.

If this happens, don’t expect it to charge back to $30 per share. In this scenario, it’ll likely drop, perhaps down into the $15-$20 per share range. Furthermore, if factors like inflation, rising interest rates, and now geopolitics continue to weigh on the markets, it may not be a stretch to say Lucid could fall back toward $10 per share. That was the debut price of its special purpose acquisition (SPAC) predecessor, Churchill Capital IV.

There may be a lot of upside potential. But keep in mind the factors that have pushed it down in recent months could also push it even lower.

LCID Stock, Earnings and Recovery Chances

It’s not set in stone that earnings will result in another slide for Lucid Group. If it announces a better-than-expected number for its 2021 deliveries and provides updates suggesting it’ll knock it out of the park when it comes to 2022 deliveries, we may see the market buy rather than sell on the news.

But take a look at recent discussion about LCID stock and earnings, and “caution” seems to be the keyword. For example, Morgan Stanley’s Adam Jonas’s view on the situation. Well known for his coverage of the EV industry, the sell-side analyst believes the company’s Q4, 2021 delivery numbers will fall “well below” management’s past estimate.

In addition, Jonas, who gives shares a “sell” rating, and a $16 per share price target, believes that the company’s 20,000 delivery target should be viewed more as a stretch goal. In short, there may only be a slim chance that this upcoming report has a big positive impact on the price of Lucid Group shares.

Far from sparking a recovery, investors could take negative elements of the earnings/guidance report and use it as a reason to bail out of the stock. Coupled with market-related factors mentioned above, this former “hot stock” could keep on dropping in the months ahead.

A Move to $10 Per Share?

Admittedly, I may be overstating things a bit when I suggest LCID stock could fall down to $10 per share. Although “EV Mania” peaked last November, investors are still very interested in having exposure to the electric vehicle trend.

That said, even if the automobile’s future is one that largely consists of electric-powered rather than gas-powered vehicles, that fact doesn’t preclude the publicly-traded names in that space from falling down to what could be fire sale prices in the long term.

Especially as the Federal Reserve’s rate hike plans could be more severe than we expect today. Not to mention, other uncertainties that could cause a bona fide stock market correction. Think of it as being similar to how internet stocks performed, during the stock market of the early 2000s.

Dotcom names, including eventual winners like Amazon (NASDAQ:AMZN), fell to very low prices in the years following the dotcom bubble. The same thing could happen here with Tesla (NASDAQ:TSLA), Lucid, Rivian (NASDAQ:RIVN), etc.

Tesla could give back a majority of its pandemic-era gains. Rivian may fall to a valuation more befitting of a company that’s only recently gotten out of the pre-revenue stage. Lucid, much like other early stage SPACs have done, like Fisker (NYSE:FSR) and Gores Guggenheim (NASDAQ:GGPI), could fall back to or near the $10 per share debut price of its predecessor.

If You Want to Own Lucid, Keep in Mind Its High Downside Risk

Lucid on the surface looks like a great comeback play. Its long-term potential may appear to outweigh the negatives. Even a partial recovery could mean big gains for those buying in today at around $26 per share.

Yet, alongside this large upside potential, is the risk of another double-digit percentage decline. Underwhelming results/guidance, plus the stock market’s sell-off turning into a correction, could push LCID stock back near its SPAC offering price.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.