Further production delays may create additional sentiment overhang for Lucid’s stock. Because of these down-grades in estimated production, shares of Lucid have revalued lower dramatically and the stock currently trades at just $15.16, 74% below its all-time high. Then Lucid cut its production forecast for 2022 a second time by 50% to 6-7 thousand electric vehicles due to persistent supply chain problems. The electric vehicle manufacturer has twice lowered its production forecast for 2022, first lowering its outlook from 20 thousand EVs to 12-14 thousand EVs in February 2022. The biggest risk for Lucid is the timeline. Lucid Group: Q2’22 Balance Sheet Risks with Lucid With $4.3B in cash available already plus a potential offering of Class A common stock - which at Lucid’s current valuation could bring $670M in capital - Lucid continues to have one of the best capitalized operations in the EV industry. I assume Lucid has liquidity needs of approximately $550-560M per quarter for the next two years - including cost of revenue and R&D/SG&A operating expenditures - which gives the EV company a liquidity run-way of approximately 7-8 quarters even with revenues stagnant at about $100M per quarter. Lucid already has a very strong balance sheet with $4.3B in cash/cash equivalents/short term investments available to the company as of June 30, 2022. Lucid’s international expansion is practically guaranteed If this investor starts to sell a larger amount of shares, it would likely make an impact on the pricing of Lucid’s stock, but it would not be dilutive. The biggest shareholder in Lucid is Ayar - a wholly owned subsidiary of Saudi Arabia’s Public Investment Fund (“PIF”) - which, at the end of the second-quarter, had a 60.7% ownership interest in electric vehicle maker Lucid. However, such proceeds would go to the sellers of the stock, not Lucid itself, and therefore would not have a dilutive effect. The second is that the majority of available shares would come from selling securityholders which may create selling pressure for Lucid stock in the short term.The implication here is that the dilution effect that typically comes from issuing additional shares is rather limited for Lucid shareholders. As of June 30, 2022, Lucid had 1.67B shares outstanding, meaning the issuance of the Company’s Class A common stock would represent just 2.7% of the currently outstanding share volume. The first is that the shelf registration filing shows that only 44,350,000 million Class A shares may be issued by the company, meaning Lucid would get the proceeds of such a raise with which it can finance model development and capacity expansion.There are two issues here with the shelf registration that affects shareholders. In the second-quarter, Lucid broke ground on its AMP-2 facility in Saudi Arabia, which is being built to help satisfy an up to 100,000 EV order from the Kingdom. Lucid may need additional capital to finance its international expansion, especially into Europe and the Middle East. The proceeds from such sales are meant to be used for general corporate purposes which here means the ramp of the Lucid Air, Lucid’s first-ever production car. The prospectus also said that selling securityholders could sell up to 1,189,450,445 shares of common stock as well as 44,350,000 warrants. Specifically, the company may issue up to 44,350,000 shares of the Company’s Class A common stock. LCID data by YCharts Shelf registration and minimal dilution impactĪccording to Lucid’s S3 shelf registration filing from August, the electric vehicle company has informed the market and its shareholder base that it may sell common stock, preferred stock, depositary shares representing preferred stock, debt securities, warrants or other instruments with a combined value of up to $8B. While shares of Lucid are down 60% year to date and the shelf registration has added to recent selling pressure, I believe investors don’t have to worry about the offering of additional shares. At the end of August, Lucid filed a so-called S3 shelf registration with the US regulator, which would authorize the company to issue new shares to finance the ramp of its Lucid Air as well as its various special models. Lucid adjusted its production forecast in August when it reported earnings for the second-quarter. Lucid Group ( NASDAQ:LCID) made some not so good headlines lately, especially after the electric vehicle company lowered its production outlook a second time to 6-7 thousand EVs in 2022.
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