On August 29, Lucid Group, Inc. (NASDAQ: LCID) filed an S-3 registration statement with the SEC that would allow the company to issue US$8 billion in new capital over a three-year period after the registration is approved by the regulatory agency. The new capital could include common or preferred stock and various debt instruments.
While not a constructive development, Lucid’s “universal shelf” registration filing should not be considered too surprising. Lucid burned through approximately US$1.5 billion of cash in the first half of 2022 alone (US$823 million in 2Q 2022 and US$680 million in 1Q 2022). As of June 30, 2022, Lucid’s cash balance was US$4.3 billion.
Perhaps even more concerning: the registration statement also discusses the potential sale “from time to time” of 1.19 billion shares of common stock by existing, or “selling” shareholders. This includes the entire 1.015 billion Lucid shares owned by a Saudi Arabia state investment fund, which is known as Ayar Third Investment Company. The Saudi fund owns a 60.7% stake in the company. None of the proceeds from the potential sale of these shares would flow into Lucid’s treasury.
As of August 15, Lucid’s total shares outstanding are 1.678 billion.
As an aside, and also not a positive, Lucid’s CEO Peter Rawlinson has registered to (potentially) sell 33.9 million Lucid shares, which is actually more than the 21.4 million shares he owned in August 2022. This quirk is due to shares that will vest or become exercisable over the next few months.
In early August 2022, Lucid cut its full-year 2022 production forecast in half; it now expects to manufacture 6,000-7,000 Lucid Airs this year. In early May, the company had reaffirmed plans to produce 12,000-14,000 vehicles in 2022. In late February 2022, Lucid reset its initial 2022 production estimate to 12,000-14,000 vehicles from 20,000.
Lucid predicts that its capital expenditures will total US$2 billion in 2022 implying that such spending in the second half will accelerate to about US$1.5 billion. If the company’s operating cash flow deficit were to hold at around US$500 million per quarter, Lucid’s cash balance could fall to about US$2 billion by year-end 2022 from US$6.3 billion at December 31, 2021 — before considering any new capital that could be raised in the last four months of 2022.
| (in thousands of US $, except for shares outstanding) | Full-Year 2022 Guidance | June 30, 2022 | March 31, 2022 | December 31, 2021 | September 30, 2021 |
| Lucid Air Vehicles Delivered | 679 | 360 | 125 | 0 | |
| Lucid Air Vehicles Produced | 6,000-7,000 | 1,405 (B) | |||
| Revenue | $97,336 | $57,675 | $26,392 | $232 | |
| Operating Income | ($559,199) | ($597,530) | ($485,684) | ($497,050) | |
| Operating Cash Flow | ($513,628) | ($494,639) | ($312,733) | (A) | |
| Capital Expenditures | ($2,000,000) | ($309,800) | ($185,082) | ||
| Adjusted EBITDA | ($414,082) | ($383,781) | ($299,583) | ($244,962) | |
| Cash – Period End | Sufficient liquidity well into 2023 | $4,294,082 | $5,391,844 | $6,262,905 | $4,796,880 |
| Debt – Period End | $1,999,234 | $1,998,571 | $1,997,057 | $7,955 | |
| Shares Outstanding (Millions) | 1,668 | 1,648 | 1,642 |
(B) 1,405 vehicles were produced in the first half of 2022.
The potential of a substantial new share issuance and significant stock sales by selling shareholders (by the Saudi fund especially) seems likely to hang over Lucid shares for some time. (It is of course possible that the selling shareholders could ultimately decide not to sell any shares.)
Aside from this, Lucid stock looks quite expensive. Based on consensus 2023 estimated revenue, Lucid trades at an enterprise value-to-estimated 2023 revenue multiple of around 8x. By comparison, another leading electric vehicle OEM start-up, Rivian Automotive, Inc. (NASDAQ: RIVN), trades at a ratio of about 2.25x.
Lucid Group, Inc. last traded at US$15.16 on the NASDAQ.
Information for this briefing was found via Edgar and the 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.
