After the market close on May 31, Lucid Group, Inc. (NASDAQ: LCID) announced that it had raised about US$3 billion. US$1.8 billion of funds raised came from its majority stockholder, Saudi Arabia’s Public Investment Fund (PIF), and US$1.2 billion from a public offering. Altogether, Lucid issued 439.2 million new shares at an average price of US$6.83 per share (US$6.77 from the Saudis and US$6.91 from the public).
The offering was structured so that the PIF maintained its 60.5% ownership stake in Lucid.
The stock sale increased the number of Lucid shares outstanding 24% to at least 2.272 billion from the 1.833 billion as of March 31, 2023.
Pro forma for the offering, Lucid’s cash balance as of March 31, 2023 is just under US$6.0 billion, and its net cash position is around US$3.9 billion (net of US$2.1 billion of debt).
On the surface, such a cash position looks like a fortress balance sheet, but that fortress seems likely to be cut at least in half by the end of 2023 (at a cost of a giant increase in the number of shares outstanding). Lucid burned US$1.04 billion of cash in 1Q 2023 (defined as operating cash flow less capex) after US$940 million and US$870 million in cash burned in 4Q 2022 and 3Q 2022.
LUCID GROUP, INC.
| (in thousands of US $, except production/delivery unit statistics, revenue per vehicle delivered and for shares outstanding) | 2023 Management Guidance | Twelve Months Ended 3-31-23 (A) | March 31, 2023 (A) | December 31, 2022 | September 30, 2022 |
| Lucid Air Vehicles Delivered | 5,415 | 1,406 | 1,932 | 1,398 | |
| Lucid Air Vehicles Produced | > 10,000 | 2,314 | 3,493 | 2,282 | |
| Revenue | $699,938 | $149,432 | $257,713 | $195,457 | |
| Revenue per Vehicle Delivered | $129,259 | $106,282 | $133,392 | $139,812 | |
| Operating Income | ($2,768,622) | ($772,161) | ($749,739) | ($687,523) | |
| Operating Cash Flow | ($2,532,873) | ($801,264) | ($648,515) | ($569,466) | |
| Capital Expenditures | ($1,400,000) to ($1,600,000) | ($1,131,522) | ($241,770) | ($289,888) | ($290,064) |
| Adjusted EBITDA | ($2,234,493) | ($643,898) | ($623,610) | ($552,903) | |
| Cash – Period End (A) | $5,978,415 | $5,978,415 | $3,912,996 | $3,342,181 | |
| Debt – Period End | $2,082,197 | $2,082,197 | $2,083,762 | $2,079,722 | |
| Shares Outstanding (millions) (A) | 2,272 | 2,272 | 1,829 | 1,681 |
Since Lucid’s quarterly free cash flow deficits in the second, third and fourth quarters of 2023 seem likely to be consistent with the 1Q 2023 shortfall based on management’s vehicle production estimate, it seems reasonable to conclude that the company’s year-end 2023 cash balance will be around US$3 billion, down from US$3.9 billion at year-end 2022 despite raising US$3 billion of (expensive) new equity during 2023.
Lucid slashed its full-year 2023 production forecast in early May to “more than 10,000” vehicles from its previous forecast of 10,000 to 14,000 cars. This current full-year forecast would imply that quarterly production during the rest of the year stays at about the 2,314-production pace of 1Q 2023.
READ: Lucid Cuts 2023 Production Guidance, Stops Disclosing Reservation Data
Make no mistake, Lucid is a richly valued stock. Based on its current US$6.54 price, its enterprise value (EV) is about US$11 billion. Lucid’s revenue over the twelve months ended March 31, 2023 totaled about US$700 million, meaning the stock trades at an EV-to-revenue multiple of nearly 16x.
Phrased another way, Lucid’s adjusted EBITDA loss over the last twelve months is more than US$2.2 billion, and quarterly losses have been steepening in recent quarters — US$644 million in 1Q 2023; US$624 million in 4Q 2022; US$553 million in 3Q 2022; and US$414 million in 2Q 2022. The stock market’s awarding a US$11billion valuation to a company with such a cash flow profile is difficult to understand.
Lucid Group, Inc. last traded at US$6.60 on the NASDAQ.
Information for this story was found via Edgar and the sources and companies 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.
