Lucid Hammered by Results

By Douglas A. McIntyre Published Nov 9, 7:30AM EST

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Lucid Hammered by Results — © tobntno / iStock via Getty Images

Electric vehicle (EV) maker Lucid Group Inc. (NASDAQ: LCID | LCID Price Prediction) disappointed its shareholders again. Poor earnings pushed the stock down. Shares were also hurt because of new financing to raise desperately needed capital. Lucid’s future is by no means guaranteed in what has become one of the most competitive consumer sectors in the world.

The Lucid news pushed shares down to $12.40 apiece, near their 52-week low. The stock is down 70% in the past year. The market cap is still too rich at $22 billion, compared to Ford’s $55 billion. Even with poor management, a car company of Ford’s size should be worth much more than one that can barely stay in business.

Lucid stuck to the forecast to make 6,000 to 7,000 cars this year. That was down from previous forecasts, and it is a small figure, given that rival Tesla could sell a million cars this year.

Lucid said it has over 34,000 reservations for its cars. This means almost nothing. People can go elsewhere very quickly. Those who have to wait much longer for a car may make the move. The artificial number should not fool shareholders.
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Lucid lost $688 million on revenue of $195 million. Its balance sheet showed a dangerous drop in cash. Lucid had short-term investments of $2.1 billion at the end of the quarter. In addition, it had $1.3 billion in cash and cash equivalents. These are down from short-term investments of $6.3 billion and cash and cash equivalents of $6.4 billion at the end of 2021.
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Lucid announced it had raised $1.5 billion, which may not be enough. Of this, $600 million will come from the sale of common shares, which dilute current shareholders. Another $915 million of common shares will be issued to large shareholders and affiliates. The decision will put more pressure on the stock.
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Lucid’s ongoing demise continues because of the overwhelming competition from Tesla and every major car company worldwide. The EV market is expected to be so large that the likes of Ford, General Motors and Volkswagen have decided to put billions of dollars into their businesses for a share of the EV market, the sales of which are expected to be in the tens of billions of dollars by the end of the decade.

Even with an injection of cash, Lucid is too small to be an even modest winner.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.