{"id":35156,"date":"2023-07-13T11:47:58","date_gmt":"2023-07-13T15:47:58","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/lucid-stock-drops-12-as-deliveries-miss-cash-burns-short-sellers-win\/"},"modified":"2023-07-13T11:48:00","modified_gmt":"2023-07-13T15:48:00","slug":"lucid-stock-drops-12-as-deliveries-miss-cash-burns-short-sellers-win","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=35156","title":{"rendered":"Lucid Stock Drops 12% As Deliveries Miss, Cash Burns, Short Sellers Win"},"content":{"rendered":"<div>\n<p>Lucid Group \u2014 a Newark, Calif.-based designer, maker, and seller of luxury EVs, EV powertrains, and EV batteries \u2014 delivered investors a beautiful PowerPoint presentation prior to its July 2021 SPAC merger.<\/p>\n<p>Nearly two years later, Lucid\u2019s developing picture is nowhere near as brilliant as planned. While it raised $3 billion in cash in May, second quarter 2023 deliveries fell short of analyst expectations.<\/p>\n<p>What\u2019s more, CEO Peter Rawlinson is optimistic about Lucid\u2019s future products aimed at Tesla\u2019s SUV, Model 3, and Model Y.<\/p>\n<p>Nevertheless, Lucid\u2019s stock has plunged from its peak and its shares are heavily shorted.<\/p>\n<p>Unless Lucid can deliver more vehicles than investors expect for several consecutive quarters, short sellers have more room to profit.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Lucid\u2019s Recent Disappointments<\/h2>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p>On July 12, Lucid stock lost about 12% of its value after reporting disappointing second quarter deliveries. This followed Lucid\u2019s larger-than-expected first quarter loss amid fears of insufficient demand for its high priced EVs.<\/p>\n<p>Here are Lucid\u2019s low lights, according to CNBC:<\/p>\n<ul>\n<li><strong>Second quarter deliveries fell 30% below expectations. <\/strong>Lucid delivered 1,404 Air luxury sedans, which sell for $92,900 before incentives, in the quarter \u2014 596 units fewer than analysts polled by FactSet expected.<\/li>\n<li><strong>Second quarter Air production dropped 6% from first quarter. <\/strong>Lucid produced<strong> <\/strong>2,173 Airs in the period \u2014 6% fewer than it produced in the first quarter.<\/li>\n<li><strong>Will produce far fewer Airs in 2023 than customers pre-ordered. <\/strong>In February, Lucid told Wall Street analysts it would build between 10,000 and 14,000 Airs in 2023 \u2014 fewer than half its \u201cover 28,000\u201d reservations on hand.<\/li>\n<\/ul>\n<p>It\u2019s not all bad news. In June, Lucid announced it would receive some $230 million from Aston Martin and 3.7% of its stock in exchange for making EV powertrains for the storied British automaker. In May, Lucid raised $3 billion in cash \u2014 giving it enough cash to survive until mid-2025, <em>Barron\u2019s<\/em> reported.<\/p>\n<p>One analyst expressed concern that Lucid is out of step with the broader EV market. On July 12, Citi analyst Itay Michaeli told <em>Dow Jones<\/em>, the drop in Lucid\u2019s stock price \u201cis understandable given the magnitude of the [second-quarter] delivery miss and the widening spread between production and deliveries.\u201d<\/p>\n<p>As Michaeli wrote in a note, Air\u2019s high price point contributed to its disappointing delivery report. He sees Lucid under increased pressure to deliver lower-priced EVs to compete with faster-growing rivals.<\/p>\n<p>In my view, Lucid is falling behind Tesla \u2014 which reported an 83% rise in second quarter shipments and Rivian \u2014 which enjoyed 59% delivery growth in the second quarter, 15% above expectations.<\/p>\n<p>In 2923\u2019s first quarter, Lucid reported $149 million in revenue \u2014 29% below expectations \u2014 and a $780 million net loss \u2014 nearly $700 million more than it lost the year before, <em>CNBC<\/em> reported.<\/p>\n<p>Lucid ended the first quarter with about $3.4 billion in cash and about $700 million in available credit lines after burning through $1 billion in free cash flow during the quarter.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">What Lucid Expected Prior to Its SPAC Merger<\/h2>\n<p>Lucid painted a bright picture for itself ahead of its SPAC merger. In July 2021, Lucid merged with a SPAC called Churchill Capital Corp IV.<\/p>\n<p>A big part of that bright picture was its Lucid Air \u2014 which the company expected to exceed the range Tesla\u2019s Model S. According to Lucid\u2019s <em>July 2021 investor presentation, <\/em>the Air\u2019s range would be 517 miles \u2014 about 26% more than that of the Model S.<\/p>\n<p>Lucid\u2019s production targets and revenue goals were ambitious. According to its <em>July 2021 investor presentation<\/em>, Lucid expected to produce 20,000 vehicles in 2022, 49,000 in 2023, and 251,000 in 2026. The EV-maker expected to generate $97 million in 2021 revenue \u2014 growing at a 198% compound annual rate to $23.8 billion by 2026.<\/p>\n<p>Lucid has fallen way short of its expectations. In 2022, according to <em data-ga-track=\"ExternalLink:https:\/\/insideevs.com\/news\/662369\/lucid-air-deliveries-2023q1\/#:~:text=For%20reference%2C%20in%202022%2C%20Lucid,3%2C500%20per%20quarter%20on%20average).\">Inside EVs<\/em>, it produced 7,180 vehicles \u2014 64% below expectations. In 2023, its highest production forecast of 14,000 is 71% below the number it expected to build two years ago.<\/p>\n<p>In 2021, Lucid was very excited about its future. According to <em>CNBC<\/em>, Rawlinson said the SPAC merger \u201csecures Lucid\u2019s financial runway through the end of 2022. We do have a very illustrious roster of blue-chip institutional investors but we\u2019ve attracted so much interest from the retail sector as well \u2014 It\u2019s a testament to the appeal of our product and our technology that we\u2019ve enjoyed that position.\u201d<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Where Lucid Stock Goes Next<\/h2>\n<p>Lucid has been overly optimistic. Since peaking at about $58 a share in October 2021, its stock has lost 88% of its value. Meanwhile, investors are bearish on the company with 42% of its float is sold short, according to the <em data-ga-track=\"ExternalLink:https:\/\/www.wsj.com\/market-data\/quotes\/LCID?mod=searchresults_companyquotes\">Wall Street Journal<\/em><em>.<\/em><\/p>\n<p>Analysts are bullish about Lucid stock \u2014 seeing 25% appreciation potential. According to <em>CNNMoney<\/em>, eight analysts \u201coffering 12-month price forecasts for Lucid Group have a median target of $9.\u201d<\/p>\n<p>Rawlinson intends to launch new products to compete with Tesla. In June, he told <em data-ga-track=\"ExternalLink:https:\/\/finbold.com\/lucid-ceo-takes-on-elon-musk-after-revealing-model-y-model-3-rivals\/\">Finbold News<\/em>, Lucid\u2019s Gravity SUV is \u201cgoing to be a seminal product \u2013 a seven-seat, three-row SUV, super practical.\u201d<\/p>\n<p>Rawlinson added, \u201cAfter Gravity, we\u2019re going to do [Tesla] Model 3 and Model Y competitors. We think around $50,000, maybe $48,000 \u2013 something like that. It\u2019s too early to say, but that\u2019s the vision,\u201d noted <em>Finbold<\/em> <em>News<\/em>.<\/p>\n<p>Next month, Lucid will issue its second quarter 2023 financial results. If the EV-maker exceeds expectations and\/or raises guidance, many of those short sellers will have to buy the stock to cover their positions \u2014 driving up the stock.<\/p>\n<p>If Lucid again disappoints investors, those shorts will keep winning.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/petercohan\/2023\/07\/13\/lucid-stock-drops-12-as-deliveries-miss-cash-burns-short-sellers-win\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Lucid Group \u2014 a Newark, Calif.-based designer, maker, and seller of luxury EVs, EV powertrains, and EV batteries \u2014 delivered investors a beautiful PowerPoint presentation prior to its July 2021 SPAC merger. Nearly two years later, Lucid\u2019s developing picture is nowhere near as brilliant as planned. While it raised $3 billion in cash in May, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":35157,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-35156","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Lucid Stock Drops 12% As Deliveries Miss, Cash Burns, Short Sellers Win | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Lucid Group \u2014 a Newark, Calif.-based designer, maker, and seller of luxury EVs, EV powertrains, and EV batteries \u2014 delivered investors a beautiful\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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