On April 13, Lucid Group, Inc. (NASDAQ: LCID) announced disappointing production and delivery totals for 1Q 2023. During the quarter, the company produced 2,314 Lucid Air models and delivered just 1,406 of them. This performance represents a significant step back from 4Q 2022 production and delivery quantities of 3,493 and 1,932, respectively.
The 1Q 2023 results almost certainly confirm rumors of weakening demand for Lucid vehicles. The lighter-than-expected figures also explain why the company announced plans in late March to cut 1,300 employees, equivalent to about 18% of its workforce.
A near-term concern is that Lucid’s 1Q 2023 revenue is likely to be well below its 4Q 2022 sales of US$258 million. Since Lucid’s cash burn rate (defined as operating cash flow less capital expenditures) was about negative US$840 million in that quarter, its burn rate promises to be even greater in 1Q 2023. Lucid will release 1Q 2023 financial results on May 8.
LUCID GROUP, INC.
| (in thousands of US $, except production/delivery unit statistics and for shares outstanding) | 2023 Guidance | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 |
| Lucid Air Vehicles Delivered | 1,406 | 1,932 | 1,398 | 679 | |
| Lucid Air Vehicles Produced | 10,000 to 14,000 | 2,314 | 3,493 | 2,282 | 1,405 (A) |
| Revenue | $257,713 | $195,457 | $97,336 | ||
| Operating Income | ($749,739) | ($687,523) | ($559,199) | ||
| Operating Cash Flow | ($648,515) | ($569,466) | ($513,628) | ||
| Capital Expenditures | ($1,500,000 to $1,750,000) | ($289,888) | ($290,064) | ($309,800) | |
| Adjusted EBITDA | ($623,610) | ($552,903) | ($414,082) | ||
| Cash – Period End | Sufficient liquidity into 1Q 2024 | $3,912,996 | $3,342,181 | $4,294,082 | |
| Debt – Period End | $2,083,762 | $2,079,722 | $1,999,234 | ||
| Shares Outstanding (Millions) | 1,829 | 1,681 | 1,668 |
Lucid can weather the short-term cash drain — it had US$3.9 billion of cash as of December 31, 2022 — but the company almost certainly needs to raise substantial additional equity in the near term. Note that any such issuance would be only months after the company’s December 2022 US$1.5 billion, 142-million share equity sale.
Lucid’s 1Q 2023 manufacturing rate seems to imply it will be able to meet the lower end of its 10,000 to 14,000 unit production guidance for the full year 2023. But given its worrying cash flow situation, merely meeting the low end of guidance would not be a triumph. Lucid manufactured 7,180 Lucid Airs in 2022.
The most puzzling aspect of all this is that investors continue to search for a sliver of blue in a sky filled with clouds. After factoring in the company’s 1.83 billion shares outstanding and its US$1.8 billion net cash position, Lucid carries an enormous enterprise value of about US$13 billion.
For a company which burns cash at its current pace, plus which will be unlikely to generate free cash flow for many years, the market assigning Lucid such a generous valuation makes little sense. There were unsubstantiated rumors earlier this year of a full take-out of Lucid by the Saudi sovereign wealth fund which already owns a 61% stake in the electric vehicle manufacturer; however, it would be quite unusual for an entity to acquire the remaining shares of a company in which it already owns a majority interest when such an action would require the acquiring entity to infuse enormous quantities of additional cash on top of paying cash to buy out minority share owners.
Lucid Group, Inc. last traded at US$8.25 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.
