On November 7 after the market closed, Lucid Group, Inc. (NASDAQ: LCID) reported disappointing 3Q 2023 financial results and slashed its full-year 2023 production forecast. Production is now estimated to between 8,000-8,500 vehicles, down from the 10,000+ guidance it had maintained for about the last six months. The company has produced 6,037 cars over the first three quarters of 2023.
Lucid manufactured 1,550 vehicles in the quarter, down notably from 2,173 in 2Q 2023. As a partial offset, Lucid did say that more than 700 additional vehicles are in transit to Saudi Arabia for final assembly. Lucid delivered 1,457 cars to customers in 3Q 2023, up slightly from 1,404 in 2Q 2023.
Clearly, lower demand for Lucid’s expensive models is creating mounting problems for the start-up electric vehicle manufacturer. As an illustration, just this week Lucid cut the price of its all-wheel drive Air Pure model to US$74,900 from US$82,400, and its Air Touring model to US$87,500 from US$95,000. The company said these discounts will only be available until November 30.
READ: Lucid Produces Fewer Cars In Third Quarter While Deliveries Remain Flat
Aside from the reduced 2023 production guidance, a second major negative aspect of Lucid’s 3Q 2023 earnings release were weak revenues and a significant drop in revenue per vehicle delivered. Specifically, the company’s third quarter revenue was US$137.8 million, well below analysts’ consensus expectations of US$184 million. In addition, Lucid realized US$94,588 per unit sold in 3Q 2023, down a whopping 12% from US$107,460 just a quarter ago.
LUCID GROUP, INC.
| (in thousands of US $, except production/delivery unit statistics, revenue and gross profit per vehicle delivered, and for shares outstanding) | 2023 Management Guidance | Twelve Months Ended 9-30-23 | September 30, 2023 | June 30, 2023 | March 31, 2023 |
| Lucid Air Vehicles Delivered | 6,199 | 1,457 | 1,404 | 1,406 | |
| Lucid Air Vehicles Produced | 8,000 to 8,500, down from 10,000+ | 9,530 | 1,550 (A) | 2,173 | 2,314 |
| Revenue | $695,833 | $137,814 | $150,874 | $149,432 | |
| Revenue per Vehicle Delivered | $112,249 | $94,588 | $107,460 | $106,282 | |
| Gross Profit | ($1,445,509) | ($331,908) | ($404,931) | ($351,092) | |
| Gross Profit per Vehicle Delivered | ($233,184) | ($227,802) | ($288,412) | ($249,710) | |
| Operating Income | ($3,112,460) | ($752,875) | ($837,685) | ($772,161) | |
| Operating Cash Flow | ($2,663,719) | ($513,582) | ($700,358) | ($801,264) | |
| Capital Expenditures | ($1,000,000) to ($1,100,000) | ($927,890) | ($192,517) | ($203,715) | ($241,770) |
| Adjusted EBITDA | ($2,601,901) | ($624,051) | ($710,342) | ($643,898) | |
| Cash | Sufficient liquidity at least into 2025 | $4,422,597 | $4,422,597 | $5,249,294 | $2,978,415 |
| Debt | $2,081,656 | $2,081,656 | $2,083,167 | $2,082,197 | |
| Shares Outstanding (millions) | 2,289 | 2,289 | 2,282 | 1,833 |
Two slight offsetting positives in Lucid’s third quarter were reduced operating cash flow and adjusted EBITDA deficits versus 2Q 2023 results. The company’s operating cash flow and adjusted EBITDA totaled negative US$514 million and negative US$624 million in the just-completed quarter versus losses of US$700 million and US$710 million, respectively, in the quarter ended June 30, 2023.
Lucid’s cash balance and its net cash balance (cash net of debt) fell to US$4.42 billion and US$2.08 billion, respectively, as of September 30, 2023. Furthermore, it is reasonable to assume the comparable figures will be about US$3.7 billion and US$1.4 billion, respectively, as of year-end 2023. This magnitude of cash appears low for a company with such enormous near-term cash needs. As a result, Lucid’s announcing another significant, highly dilutive equity or convertible debt offering in the next few months seems quite likely.
In many ways, Lucid is stuck in an extremely vicious financing cycle. It has substantial additional financing needs, but the mere announcement of any capital raising plans will likely cause the stock to correct further, making any stock issuance even more expensive.
Lucid shares are down about 40% YTD, but it remains an expensive stock. Factoring in its 2.289 billion shares outstanding and the net cash on its balance sheet, the company’s enterprise value (EV) is about US$7.8 billion. Lucid’s revenue over the twelve months ended September 30, 2023 totaled US$696 million, meaning the stock trades at an EV-to-revenue multiple of around 11x.
Investors should be mindful that just because the stock looks richly valued on a fundamental basis, intermittent short covering rallies are possible. After all, Lucid is one of the most heavily shorted stocks. As of mid-October, about 221 million shares were shorted, equivalent to nearly 20% of its float.
Lucid Group, Inc. last traded at US$3.80 on the NASDAQ.
Information for this story was found via Edgar and the sources and 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.
