Lucid Group’s Cash Burn Remains Very High In 3Q 2022
After the regular market close on November 8, Lucid Group, Inc. (NASDAQ: LCID) reported a disappointing 3Q 2022, particularly in relation to the company’s extraordinary cash burn rate. The company’s combined operating cash flow loss plus capital expenditures totaled about US$860 million in the quarter, up sequentially from US$813 million in 2Q 2022. Over the first nine months of 2022, Lucid burned US$2.36 billion of cash.
Lucid declined to provide operating cash flow guidance for 4Q 2022. However, management did project 4Q 2022 capital spending of around US$415 million versus US$290 million in 3Q 2022.
Not surprisingly, this outflow has caused Lucid’s cash balance to plummet over the course of 2022. The company had US$3.3 billion of cash as of September 30, 2022, down from US$6.3 billion at year-end 2021.
| (in thousands of US $, except production/delivery unit statistics and for shares outstanding) | 4Q 2022 Guidance | September 30, 2022 | June 30, 2022 | March 31, 2022 |
| Lucid Air Vehicles Delivered | 1,398 | 679 | 360 | |
| Year-to-Date Deliveries | 2,437 | 1,039 | 360 | |
| Lucid Air Vehicles Produced | 2,313-3,313 | 2,282 | 1,405 (A) | |
| Year-to-Date Production | 3,687 | 1,405 | ||
| Revenue | $195,457 | $97,336 | $57,675 | |
| Operating Income | ($687,523) | ($559,199) | ($597,530) | |
| Operating Cash Flow | ($569,466) | ($513,628) | ($494,639) | |
| Capital Expenditures | ($415,054) | ($290,064) | ($309,800) | ($185,082) |
| Adjusted EBITDA | ($552,903) | ($414,082) | ($383,781) | |
| Cash – Period End | Sufficient liquidity into at least 4Q 2023 | $3,342,181 | $4,294,082 | $5,391,844 |
| Debt – Period End | $2,079,722 | $1,999,234 | $1,998,571 | |
| Shares Outstanding (Millions) | 1,681 | 1,668 | 1,668 |
Vehicle production figures in 3Q 2022 were constructive versus prior results, but the company had announced this manufacturing data about a month ago. Lucid manufactured 2,282 Lucid Airs in 3Q 2022, 62% more than it produced in the first two quarters of 2022 combined.
Lucid’s 3Q 2022 production quantity brings the total for the first nine months of 2022 to 3,687. The company reiterated its full-year 2022 production goal of 6,000-7,000 cars. (In early August, Lucid slashed its full-year 2022 production forecast from its previous 12,000-14,000 unit projection.)
Lucid’s reservations declined over the last three months to 34,000+ as of November 7, 2022 from 37,000+ on August 3, 2022. Both figures exclude up to 100,000 purchase commitments from the government of Saudi Arabia.
In conjunction with the earnings release, Lucid announced an “at-the-market” (ATM) stock issuance program whereby the company may over time sell up to US$600 million of stock, equivalent to just under 50 million new shares based on the US$12.15 price at which Lucid changed hands in after-hours trading on November 8.
Furthermore, Lucid’s core investor, a Saudi Arabian investment fund which owns a 60+% stake in Lucid, has agreed to purchase US$915 million of Lucid stock in one or more private placements over the period ending March 31, 2023. The Saudi fund will pay a price equal to the volume weighted average price in a given quarter of the ATM program discussed just above.
Based on these stock issuance plans, Lucid may be issuing about 125 million of new shares over the next ~6 months which would bring its shares outstanding to just over 1.8 billion shares from the current 1.68 billion. In addition, the Saudi fund’s percentage ownership stake in Lucid would increase marginally.
Despite the dramatic 75% decline in Lucid’s stock price over the last twelve months, the company’s enterprise value is still just over US$21 billion. iven Lucid’s high cash burn rate, plus the pressure of around 50 million new shares of stock being sold to the public over perhaps the next six months, it is difficult to understand the stock’s still sky-high valuation.
Lucid Group, Inc. last traded at US$11.00 on the NASDAQ.
Information for this briefing was found via 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.
