Lucid Motors Raises US$3 Billion From Stock Sale
With the Lucid Air, which won the 2023 World premium Car Award, Lucid Group, Inc. (NASDAQ: LCID) is redefining the premium electric experience.
Lucid Group Inc.(NASDAQ: LCID) raised close to $3 billion per the closing markets of May 31st. Out of this sum, the Public Investment Fund (PIF ) of Saudi Arabia's contribution amounted to a generous amount worth $1.8 billion. In comparison, around $1.2 billion were obtained through an IPO resulting in a total issuance by Lucid, adding up to 439.2 million shares with an approximate average share price being sold at about $6.83 (per share).
Notably, out of this average amounting to approximately [$US6 .91], nearly [US $6 .77] was generated by sales to Saudi Arabia while general public sales filled in at roughly [US $6.91].
Who Is Lucid Motors?
An American automobile company that specialises in the creation of electric cars (EVs) is called Lucid Motors. Initially focusing on creating electric powertrain technology for other vehicle manufacturers, the business was established in 2007 under the name "Atieva.".
The company rebranded as Lucid Motors in 2016 and shifted its focus to producing high-end electric automobiles. Lucid Motors gained a lot of interest from the automotive industry once the Lucid Air, their first production vehicle, was released in 2020. The Lucid Air, an electric premium sedan with excellent performance, competes with other luxury electric vehicles like Tesla's Model S.
Impressive features include a range of up to 520 miles on a single charge (per the EPA), opulent interior elements, cutting-edge driver-assistance systems, and more.
The business is devoted to creating environmentally friendly mobility options and is committed to sustainability. Since all of Lucid Motors' vehicles are electric, they help the industry transition to a more ecologically friendly one and reduce greenhouse gas emissions.
Details of US$3 Billion Raised From Stock Sale
The offering was designed so that the PIF could continue to possess 60.5% of Lucid.
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The stock sale increased the number of outstanding Lucid shares by 24%, from 1.833 billion as of March 31, 2023, to at least 2.272 billion.
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Pro forma for the Offering, Lucid had just under US$6.0 billion in cash as of March 31, 2023, and it had a net cash position of around US$3.9 billion (net of US$2.1 billion in debt).
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Such a cash position appears to be a fortress balance sheet on the surface, but that fortress appears likely to be reduced by at least half by the end of 2023 (at the expense of a significant rise in the number of outstanding shares).
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After burning US$940 million and US$870 million in the fourth and third quarters of 2022, Lucid burned US$1.04 billion in cash in the first quarter of 2023 (defined as operating cash flow less capex).
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The stock of Lucid is highly valued. Its enterprise value (EV), based on its current price of US$6.54, is approximately US$11 billion. The company trades at an EV-to-revenue multiple of around 16 times based on Lucid's revenue of approximately US$700 million for the twelve months ending March 31, 2023.
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To put it another way, Lucid's adjusted EBITDA loss for the last twelve months exceeded US$2.2 billion, and recent quarterly losses have gotten worse, totaling US$644 million in the first quarter of 2023. US$624 million in the fourth quarter of 2022.
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Both US$414 million and US$553 million in the third and second quarters of 2022, respectively. It is unclear why the stock market valued a company with such a cash flow profile at US$11 billion.
Review For 2023 So Far
It seems reasonable to conclude that the company's year-end 2023 cash balance will be around US$3 billion, down from US$3.9 billion at year-end 2022 despite raising US$3 billion of (expensive) new equity during 2023, given that Lucid's quarterly free cash flow deficits in the second, third, and fourth quarters of 2023 seem likely to be consistent with the 1Q 2023 shortfall based on management's estimated vehicle production.
Early in May, Lucid reduced their previous estimate of 10,000 to 14,000 automobiles for the entire year 2023 to "more than 10,000" vehicles. According to the current full-year prediction, quarterly production for the remainder of the year is expected to remain roughly at the 2,314-production rate of the first quarter of 2023.
Will Lucid Motors Survive?
With all the financials falling short of expectations, Lucid Motors, once a promising firm, appears to be fighting for its existence.
Elon Musk warned that Lucid might be on the verge of bankruptcy last year, and the financial results revealed by Lucid on Tuesday certainly make it seem as though its days are numbered.
Even Lucid executives had to confess that the company would only last another year despite the presentation's positive tone.