Lucid Group NASDAQ: LCID had a better-than-expected quarter, with manufacturing and deliveries rising, income outpacing consensus estimates, and the stability sheet capitalized. Nonetheless, its inventory value is unlikely to maneuver considerably increased. This cash-intensive EV OEM start-up remains to be burning money, slowly consuming itself to loss of life, and dilution is a big headwind for shareholders. Moreover, the capital construction, risk of dilution and failure have the short-interest operating close to 30%, a lifeless weight for a market to bear. The takeaway is that LCID deserves a spot on a watchlist as a result of it may grow to be an actual participant within the automotive universe, however now is just not the time to purchase.
(As of 08/6/2024 ET)
- 52-Week Vary
- $2.29
▼
$7.30
- Worth Goal
- $4.14
Capitalization, money burn, and dilution are probably the most important elements for buyers to concentrate on. The corporate has $4.28 billion in liquidity and introduced a brand new funding by the Saudi Public Funding Fund, however there are nonetheless doubts. On the present money stage and burn charge, Lucid has about seven quarters of life left in it, however seven quarters is a very long time for buyers to attend, and sudden prices lie round almost each nook. In the meantime, the share depend is rising, ample shares stay to be bought, and the PIF funding will dilute the worth additional. As it’s, the diluted share depend is up 20% within the final 12 months, due largely to PIF investments over the previous twelve months and rising.
Lucid Group Makes Headway With Manufacturing and Deliveries
Lucid Group made headway in Q2, ramping manufacturing and deliveries of the Air sequentially and in comparison with final 12 months. The takeaway is that 2,394 deliveries are nonetheless a drop within the bucket in contrast to what’s wanted to achieve profitability. As it’s, the corporate reported $200.6 million in web income for a achieve of 33% in comparison with final 12 months. The income outpaced the consensus by 350 foundation factors, however the power didn’t attain the underside line.
The corporate was capable of cut back prices and enhance margin however missed the consensus with adjusted earnings of $0.29, about 650 foundation factors shy of expectations. As a result of the corporate is focusing on a late-2024 begin time for Gravity manufacturing, buyers ought to count on prices and spending to rise because the 12 months progresses. The corporate’s loss from operations elevated sequentially regardless of the year-over-year enchancment.
Analyst Lifts Ranking for Lucid: It Received’t Elevate the Inventory Worth
$4.14
33.98% UpsideScale back
Primarily based on 10 Analyst Scores
| Excessive Forecast | $6.00 |
|---|---|
| Common Forecast | $4.14 |
| Low Forecast | $2.90 |
A number of analysts have issued updates following Lucid’s Q2 launch, together with one improve. Cantor Fitzgerald upgraded to Maintain from Scale back with a value goal of $4, however don’t count on it to raise the value motion a lot. The consensus score and value goal are nonetheless free-falling in comparison with the prior expectations. Sentiment is trending at Scale back in comparison with final 12 months’s Maintain, and the value goal is down greater than 50%. As it’s, the consensus goal implies a 30% upside, adequate to maintain merchants however a dangerous guess for buyers, with most targets operating from $2 to $3.
Institutional exercise is unlikely to help the value motion both. Institutional holdings run above 60% of the float and have elevated within the final 12 months primarily as a result of PIF. The PIF owns greater than 60% of the corporate and should maintain 100% or shut sufficient by the point this story runs its course. As with Volkswagen’s funding in Rivian, the play for the PIF is extra doubtless targeted on Lucid’s expertise than its worth as an unbiased EV OEM. Among the many highlights from the report is an industry-leading 5 miles of journey per kilowatt hour. Most EVs vary close to 3.5 miles per kWh.
The worth motion post-release is favorable, displaying help on the backside of a buying and selling vary. Nevertheless, the marketplace for LCID stays capped by a cluster of transferring averages that embrace the 30- and 150-day EMAs. With this in play, it’s unlikely LCID will transfer a lot increased quickly. The doubtless state of affairs is that LCID inventory will pattern on the vary backside with a threat of falling to new lows.
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