Lucid, a prominent electric vehicle start-up, is set to announce its third-quarter financial results on Tuesday evening. This comes at a time when both the company and the industry are facing significant challenges. Investors are eagerly awaiting signs of a turnaround in demand for Lucid’s luxury electric vehicles (EVs).
According to Bloomberg, Wall Street analysts are projecting a loss of 40 cents per share for the quarter, with sales estimated at around $178 million. In the second quarter of 2023, Lucid reported a loss of 40 cents per share and sales of $151 million.
While a loss is expected, investors are hoping to see improvement. In the third quarter, the company is anticipated to have utilized approximately $890 million in cash for its business operations, slightly lower than the $900 million used in the previous quarter. Analysts are predicting cash consumption between $900 million and $1.1 billion for the coming quarters.
A decrease in cash burn would be seen as a positive signal. Additionally, higher production targets would be well-received.
During the third quarter, Lucid manufactured 1,550 units, bringing the total to approximately 6,000 units for the first nine months of 2023. To achieve their full-year production guidance of approximately 10,000 units, the company needs to produce an additional 4,000 units in the fourth quarter.
However, Wall Street analysts are skeptical about reaching these targets. They project fourth-quarter deliveries of approximately 2,600 units and expect deliveries to closely align with production figures.
Overall, Lucid’s third-quarter report will be closely scrutinized as investors gauge the company’s ability to rebound in a challenging market.
Lucid Faces Challenges in a Crowded EV Market
Spear Invest founder, Ivana Delevska, points out that Lucid’s struggle can be attributed to its product lineup. The company offers high-end vehicles with a price tag of over $100,000. Back in 2012, Tesla (TSLA) was the dominant player in this market segment with its Model S. However, the scenario has changed significantly since then, with numerous luxury sedans introduced by other automakers like Mercedes-Benz (MBG. Germany), BMW (BMW. Germany), and more.
Declining Performance and Concerns
Over the past three months, Lucid shares have experienced a significant decline of approximately 35%, while the S&P 500 and Nasdaq Composite saw a minor drop of about 3%.
This decline can be partially attributed to weak production numbers. Investors have grown concerned about a potential decrease in electric vehicle (EV) demand, especially after Tesla reported weak earnings on October 18. Furthermore, Ford Motor (F) and General Motors (GM) have scaled back their EV-related spending, exacerbating worries. Weak fourth-quarter sales guidance from ON Semiconductor (ON), an EV supplier, has further intensified these concerns.
Conference Call to Address Results and Outlook
To address their performance and outlook, Lucid’s management has scheduled a conference call at 5:30 p.m. Eastern time.
Anticipation Surrounding Earnings Report
Options markets indicate that there is an expected 12% stock movement after the earnings report is released. Historically, Lucid’s shares have moved up or down by roughly 12% following the last four quarterly reports. However, it is worth noting that out of these four instances, the shares have fallen three times while only rising once.
With fierce competition and growing apprehensions about EV demand, Lucid faces an uphill battle in the market.
Lucid’s Strong Financial Position
Lucid, the electric vehicle manufacturer, has demonstrated its robust financial position by ending the second quarter with approximately $5.2 billion in cash and investments on its books. With a market capitalization of around $10 billion, Lucid remains a dominant player in the industry.
A Compelling Valuation
When considering the company’s debt and cash reserves, Lucid has an estimated worth of about $6 billion, representing a remarkable valuation of approximately 9 times its projected 2024 sales. In comparison, Tesla, one of Lucid’s key competitors, trades at a multiple of around 6.7 times its estimated 2024 sales.
Rivian Automotive’s Performance
Another notable player in the electric vehicle market is Rivian Automotive (RIVN). Rivian trades at a multiple of approximately 2 times its projected 2024 sales, making it an intriguing contender in the industry.
Lucid’s exceptional financial standing and competitive valuations highlight its position as a formidable force in the electric vehicle market.