Lucid Group, Inc. (NASDAQ: LCID) stock is down more than 85% from its all-time highs in November 2021 and 79% from year-end 2021, yet investors continue to ignore the full implications of negative industry data and Lucid’s own disappointing news releases. Keep in mind that after factoring in Lucid’s 1.83 billion shares outstanding, the company still carries an enterprise value of about US$13 billion.
On March 28, Lucid announced plans to cut 1,300 employees, equivalent to about 18% of its workforce. The one-time cash costs associated with these reductions, including severance payments, will be US$22 million to US$28 million.
Lucid’s actions almost certainly suggest sales were sluggish in 1Q 2023, a condition the company can ill afford on a cash flow basis. Lucid’s 4Q 2022, 3Q 2022, and 2Q 2022 cash burn rates (defined as operating cash flow less capital expenditures) were astounding: about negative US$940 million, negative US$860 million, and negative US$820 million, respectively.
Lucid plans to produce more cars in 2023 — 10,000 to 14,000 — than the 7,180 it manufactured in 2022 so the company’s cash burn rate may decrease to some degree this year. The company’s announced layoff plans could imply a production rate at the lower end of its guidance.
However, the company “only” had US$3.9 billion of cash at year-end 2022, so another significant dilutive equity offering seems necessary fairly soon. This would closely follow the US$1.5 billion, 142-million share equity offering which was completed in December 2022. Note that Lucid’s US$3.9 billion cash balance as of December 31, 2022 includes the proceeds from this offering.
LUCID GROUP, INC.
| (in thousands of US $, except production/delivery unit statistics and for shares outstanding) | 2023 Guidance | December 31, 2022 | September 30, 2022 | June 30, 2022 |
| Lucid Air Vehicles Delivered | 1,932 | 1,398 | 679 | |
| Lucid Air Vehicles Produced | 10,000 to 14,000 | 3,493 | 2,282 | 1,405 (A) |
| Revenue | $257,713 | $195,457 | $97,336 | |
| Operating Income | ($749,739) | ($687,523) | ($559,199) | |
| Operating Cash Flow | ($648,515) | ($569,466) | ($513,628) | |
| Capital Expenditures | ($1,500,000 to $1,750,000) | ($289,888) | ($290,064) | ($309,800) |
| Adjusted EBITDA | ($623,610) | ($552,903) | ($414,082) | |
| Cash – Period End | Sufficient liquidity into 1Q 2024 | $3,912,996 | $3,342,181 | $4,294,082 |
| Debt – Period End | $2,083,762 | $2,079,722 | $1,999,234 | |
| Shares Outstanding (Millions) | 1,829 | 1,681 | 1,668 |
The announced employee cuts will help Lucid’s cash situation some, but the impact feels a little like “a drop in the bucket.” If the average laid-off employee’s cash compensation were US$100,000, Lucid would conserve US$130 million per year, or a little more than US$30 million per quarter (not counting any offsetting benefits the employees would have generated for the company).
Based on car registration data, Cox Automotive, a leading automotive data provider, estimates that Lucid delivered only 1,344 cars to customers in 1Q 2023, a rate far below its 10,000-14,000 annual production guidance. In its release, Cox says the 1,344 deliveries would represent a 27% increase compared with 4Q 2022. However, per Lucid’s 4Q 2022 earnings release, the luxury electric vehicle maker delivered 1,932 vehicles to customers between October 1, 2022 and December 31, 2022.
Based on all this, the stock market’s decision still to ascribe a US$13 billion enterprise value to Lucid is puzzling. For example, Rivian Automotive, Inc. (NASDAQ: RIVN), another high-profile, cash burning electric vehicle manufacturer, has an enterprise value of only around US$4 billion. This US$9 billion valuation gap is hard to justify.
Lucid Group, Inc. last traded at US$8.04 on the NASDAQ.
Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
