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Shares in electric vehicle company Lucid soared 40% in January after news that the Saudi Arabian public wealth fund wanted to buy out the company.
The rally fizzled out and Lucid now trades at under 8 dollars a share. That gives the automaker a current market cap of 13.6 billion dollars. It’s got 3.4 billion of cash and investments and 2 billion of long-term debt so the enterprise value is 12.2 billion.
Over the last 12 months, Lucid has delivered 5,400 vehicles bringing in 700 million dollars of revenue. But vehicle production is expensive, net income over the last 12 months is negative 2 billion and the company has burned through roughly 3.7 billion in free cash flow.
But Lucid does make good cars. The Lucid Air is widely regarded as one of the best electric vehicles on the market. The Sapphire model can reach 60 miles an hour in under 2.0 seconds while the Grand Touring has a range of over 500 miles. In April, the Lucid Air won the 2023 world luxury car of the year.
Despite that, Lucid is seeing underwhelming demand. Deliveries are up year-over-year, but last quarters deliveries were actually down 27% from the previous quarter. And Lucid has started to offer discounts to slow down customer cancellations.
A major problem is that the Lucid Air is expensive. The pure model has a starting price of $87,400 and Sapphire starts at $249,000. That’s a difficult sell in a tight economy and the luxury sedan market is highly competitive.
Lucid CEO Peter Rawlinson admitted the company has done a poor job of marketing. On the latest earnings call he said: “We’ve got what I believe to be the very best product in the world. We’ve just too few people are aware of not just the car but even the company.”
Vehicle deliveries are much lower than rivals and the truth is, at the current rate of cash burn, Lucid is a strong bankruptcy case. That’s why you see the company searching for partnerships with other automakers like Aston Martin and why it’s putting its faith into a new SUV called Gravity. SUVs are extremely popular and Lucid probably should have started with this vehicle first.
#stocks #investing #lucidstock #stockstowatch
Shares in electric vehicle company Lucid soared 40% in January after news that the Saudi Arabian public wealth fund wanted to buy out the company.
The rally fizzled out and Lucid now trades at under 8 dollars a share. That gives the automaker a current market cap of 13.6 billion dollars. It’s got 3.4 billion of cash and investments and 2 billion of long-term debt so the enterprise value is 12.2 billion.
Over the last 12 months, Lucid has delivered 5,400 vehicles bringing in 700 million dollars of revenue. But vehicle production is expensive, net income over the last 12 months is negative 2 billion and the company has burned through roughly 3.7 billion in free cash flow.
But Lucid does make good cars. The Lucid Air is widely regarded as one of the best electric vehicles on the market. The Sapphire model can reach 60 miles an hour in under 2.0 seconds while the Grand Touring has a range of over 500 miles. In April, the Lucid Air won the 2023 world luxury car of the year.
Despite that, Lucid is seeing underwhelming demand. Deliveries are up year-over-year, but last quarters deliveries were actually down 27% from the previous quarter. And Lucid has started to offer discounts to slow down customer cancellations.
A major problem is that the Lucid Air is expensive. The pure model has a starting price of $87,400 and Sapphire starts at $249,000. That’s a difficult sell in a tight economy and the luxury sedan market is highly competitive.
Lucid CEO Peter Rawlinson admitted the company has done a poor job of marketing. On the latest earnings call he said: “We’ve got what I believe to be the very best product in the world. We’ve just too few people are aware of not just the car but even the company.”
Vehicle deliveries are much lower than rivals and the truth is, at the current rate of cash burn, Lucid is a strong bankruptcy case. That’s why you see the company searching for partnerships with other automakers like Aston Martin and why it’s putting its faith into a new SUV called Gravity. SUVs are extremely popular and Lucid probably should have started with this vehicle first.
#stocks #investing #lucidstock #stockstowatch
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NewsTranscript
00:00 Shares in electric vehicle company Lucid soared 40% in January after news that the Saudi Arabian
00:06 Public Wealth Fund wanted to buy out the company. The rally fizzled out and Lucid now trades at
00:11 under $8 a share. That gives the automaker a current market cap of $13.6 billion. It's got
00:18 $3.4 billion of cash in investments and $2 billion of long term debt so the enterprise value is $12.2
00:24 billion. Over the last 12 months Lucid has delivered 5,400 vehicles bringing in $700
00:30 million of revenue. But vehicle production is expensive. Net income over the last 12 months
00:35 is -$2 billion and the company has burned through roughly $3.7 billion in free cash flow.
00:41 But Lucid does make good cars. The Lucid Air is widely regarded as one of the best electric
00:46 vehicles on the market. The Sapphire model can reach 60 miles an hour in under 2 seconds. While
00:52 the Grand Touring has a range of over 500 miles. In April the Lucid Air won the 2023 world luxury
00:58 car of the year. Despite that Lucid is seeing underwhelming demand. Deliveries are up year
01:03 over year but last quarters deliveries were actually down 27% from the previous quarter
01:09 and Lucid has started to offer discounts to slow down customer cancellations.
01:13 A major problem is that the Lucid Air is expensive. The Pure model has a starting price
01:19 of $87,400 and Sapphire starts at $249,000. That's a difficult sell in a tight economy and
01:26 the luxury sedan market is highly competitive. Lucid CEO Peter Rawlinson admitted the company
01:32 has done a poor job of marketing. On the latest earnings call he said "We've got what I believe
01:37 to be the very best product in the world. We've just too few people are aware of not just the car
01:43 but even the company." Vehicle deliveries at Lucid are much lower than rivals and the truth
01:48 is at the current rate of cash burn Lucid is a strong bankruptcy case. That's why you see the
01:53 company searching for partnerships with other automakers like Aston Martin and why it's putting
01:58 its faith into a new SUV called Gravity. SUVs are extremely popular and Lucid probably should
02:04 have started with this vehicle first. All that said Lucid does have financial backing from Saudi
02:09 Arabia and two weeks ago Peter Rawlinson spoke of Lucid becoming the intel of the auto industry.
02:16 The idea is that Lucid can supply its best in class technology to other automakers. He said
02:21 "There's an Intel Inside logo on many computers and it would be lovely to see Lucid Inside on
02:27 cars too." But Lucid is a highly speculative stock with lots of complex factors. Fundamentally,
02:33 the company isn't winning mindshare amongst consumers and for that reason I give the stock
02:38 a negative rating. But these are my personal opinions not financial advice and I've got
02:42 no position in Lucid's stock. For more detailed analysis make sure to visit our website overlookedalpha.com