After the regular market close yesterday, Lucid Group (NASDAQ: LCID) announced 4Q 2022 results that were disappointing in virtually all respects. Particularly noteworthy was a 4Q 2022 cash burn (defined as negative operating cash flow plus capital expenditures) of about US$940 million and management’s 2023 production forecast of only 10,000 to 14,000 vehicles
While the production forecasts amounts to more than the 7,180 cars manufactured in 2022, it is well below analysts’ consensus projections of around 21,000 units. Keep in mind that as recently as early May 2022, Lucid had expected to produce 12,000-14,000 electric vehicles (EVs) in 2022.
LUCID GROUP, INC.
| (in thousands of US $, except production data and shares outstanding) | 2023 Guidance | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 |
| Vehicles Delivered | 1,932 | 1,398 | 679 | 360 | |
| Vehicles Produced | 10,000 to 14,000 | 3,493 | 2,282 | 1,405* | |
| Revenue | $257,713 | $195,457 | $97,336 | $57,675 | |
| Operating Income | ($749,739) | ($687,523) | ($559,199) | ($597,530) | |
| Operating Cash Flow | ($648,515) | ($569,466) | ($513,628) | ($494,639) | |
| Capital Expenditures | ($1,500,000 to $1,750,000) | ($289,888) | ($290,064) | ($309,800) | ($185,082) |
| Adjusted EBITDA | ($623,610) | ($552,903) | ($414,082) | ($383,781) | |
| Cash – Period End | Sufficient liquidity into 1Q 2024 | $3,912,996 | $3,342,181 | $4,294,082 | $5,391,844 |
| Debt – Period End | $2,083,762 | $2,079,722 | $1,999,234 | $1,998,571 | |
| Shares Outstanding (Millions) | 1,829 | 1,681 | 1,668 | 1,668 |
To put Lucid’s enormous 4Q 2022 cash burn rate in perspective, the deficit equated to about 60% of the US$1.5 billion of equity capital Lucid raised during the quarter by issuing 142 million new shares. Lucid’s cash and short-term investments totaled US$3.9 billion as of December 31, 2022. Given this rapid destruction of cash, which may not moderate much in 2023 at management’s estimated 2023 manufacturing rate, the company may need to sell more equity fairly soon, perhaps as early as mid-2023.
Note that Lucid produced 3,493 EVs in 4Q 2022, equivalent to an annualized rate of around 14,000 vehicles, and still burned nearly US$1 billion in the quarter. Furthermore, Lucid’s cash flow difficulties have been quite pronounced for some time. It burned through about US$860 million in 3Q 2022 and US$820 million in 2Q 2022.
Another troubling aspect of Lucid’s earnings report is the persistent decline in refundable reservations made by its customers. As of February 21, 2023, reservations for Lucid Air vehicles totaled more than 28,000. About six months ago, the company had more than 37,000 “soft orders.”
LUCID GROUP, INC.
| Date | Number of Lucid Air Reservations |
| 21-Feb-23 | > 28,000 |
| 7-Nov-22 | > 34,000 |
| 3-Sep-22 | > 37,000 |
| 5-May-22 | > 30,000 |
| 28-Feb-22 | > 25,000 |
| 15-Nov-21 | > 17,000 |
In late January 2023, Lucid shares soared on unsubstantiated rumors that Saudi Arabia’s Public Investment Fund (PIF), which owns a 60.6% stake in Lucid, was preparing to buy the shares in the auto maker it did not already own. No takeover news has been announced.
READ: Lucid Motors: Is A Saudi Fund About To Conduct A Buyout?
The odds of a takeover announcement seem low simply because PIF already owns a controlling stake in Lucid. It is not clear what strategic advantage it would gain by acquiring the remaining shares. Of course, buying out the shares of other holders could make financial sense if Lucid’s shares were priced at unusually low multiples of revenue or EBITDA. However, that valuation argument does not apply in this case.
Lucid stock has soared 62% so far in 2023, and its enterprise value is more than US$16 billion. Lucid’s 4Q 2022 results and tepid guidance for 2023 support neither the sharp movement in the shares nor Lucid’s extraordinary valuation.
Lucid Group, Inc. last traded at US$9.98 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.
