Lucid Reports Solid 3Q 2022 Production Results; Stock Still Looks Expensive

On October 12, Lucid Group, Inc. (NASDAQ: LCID) announced impressive 3Q 2022 vehicle production statistics. These results represent the most constructive tangible news the company has released in some time. Lucid manufactured 2,282 Lucid Airs in the quarter, 62% more than it produced in the first two quarters of 2022 combined.

Equally important, the 3Q 2022 production quantity brings the total for the first nine months of 2022 to 3,687 and suggests the company could reach its revised full-year 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.)

We note that a perplexing and unexplained aspect of Lucid’s 3Q 2022 manufacturing update is the large gap between its 3Q 2022 production and deliveries (2,282 cars versus 1,398) and continues a pattern from 1H 2022 (1,405 manufactured compared with 1,039 deliveries). Another start-up electric vehicle maker, Rivian Automotive, Inc. (NASDAQ: RIVN), has reported similar production-delivery disparities

As an aside, Lucid records revenue upon the delivery of vehicles, so its 3Q 2022 revenue will be based on 1,398 deliveries, not the higher production figure.

(in thousands of US $, except production/delivery unit statistics and for shares outstanding)Full-Year 2022 GuidanceSeptember 30, 2022June 30, 2022March 31, 2022December 31, 2021
Lucid Air Vehicles Delivered1,398679360125
Year-to-Date Deliveries2,4371,039360
Lucid Air Vehicles Produced6,000-7,0002,2821,405 (A)
Year-to-Date Production3,6871,405
Revenue$97,336 $57,675 $26,392 
Operating Income($559,199)($597,530)($485,684)
Operating Cash Flow($513,628)($494,639)($312,733)
Capital Expenditures($2,000,000)($309,800)($185,082)
Adjusted EBITDA ($414,082)($383,781)($299,583)
Cash – Period EndSufficient liquidity well into 2023$4,294,082 $5,391,844 $6,262,905 
Debt – Period End$1,999,234 $1,998,571 $1,997,057 
Shares Outstanding (Millions)1,668 1,668 1,648 
(A) 1,405 vehicles were produced in the first half of 2022.

Separately, in late August, Lucid filed an S-3 registration statement with the SEC that would permit it to issue up to US$8 billion in new capital (presumably much of it new equity) over a three-year period. The filing also allows its core investor, a Saudi Arabian investment fund which owns a 60+% stake in Lucid, the flexibility to sell some or all of its 1.0 billion Lucid shares over time.

Lucid has not yet sold any new shares, nor have the Saudis filed to sell any of their stake. However, the company needs to raise capital and a near-term share sale seems likely. Lucid burned around US$1.5 billion of cash (defined as its operating cash flow deficit plus capital expenditures) in the first half of 2022 alone. Furthermore, the company’s cash burn may be even more severe in 2H 2022. Based on management projections, capital spending in 2H 2022 may approach US$1.5 billion. Lucid’s June 30, 2022 cash balance was US$4.3 billion.

Even factoring in the promising 3Q 2022 production statistics, Lucid’s valuation looks quite high. Its enterprise value is US$19.5 billion despite its significant cash flow issues.

Lucid Group, Inc. last traded at US$11.89 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.

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