Lucid Group: Be Greedy When Others Are Fearful

Gregg DeGuire

Lucid Group, Inc. (NASDAQ:LCID) is my azygous largest position, and I moreover added much shares aft nan latest Q4 2022 net release. I cognize galore of you are getting impatient pinch Lucid's slow accumulation and may person considered cutting your losses and dumping your LCID banal successful frustration.

Wall Street responded negatively to nan latest net study and dumped nan stock successful response, but I really thought nan Q4 2022 study was rather bullish.

Lucid's Q4 2022 Earnings Breakdown

Lucid deed respective milestones during nan Q4 2022 net report. Q4 2022 gross reached $257.7 cardinal (up 890% YoY), while nan institution made respective cardinal changes to summation accumulation wrong management.

Net losses grew to $472 cardinal (-$0.28 per share), but Lucid CFO Sherry House addressed nan increasing losses successful nan Q4 2022 net transcript:

As we nutrient vehicles astatine debased volumes connected accumulation lines designed for higher volumes, we person and we will proceed to acquisition antagonistic gross profit related to labour and overhead costs. However, arsenic we standard production, we would expect to spot system of standard benefits.

- Lucid CFO Sherry House connected Lucid Q4 2022 net call.

So galore breathtaking developments took place, including nan company's first Lucid deliveries to Europe and Saudi Arabia, updates connected nan commencement of Project Gravity SUV accumulation successful early 2024, and much specifications astir nan Saudi PIF investment.

Big concerns astir rate pain were addressed, and nan institution vanished nan twelvemonth pinch $4.9 cardinal successful cash connected hand. Net losses reached $1.9 cardinal successful 2022, truthful I estimate that Lucid has capable rate to make it until Q2 2024 astatine nan bare minimum.

Lucid Deliveries Are Up 3,315% YoY

Annual accumulation and deliveries are nan cardinal metrics that I salary attraction to erstwhile it comes to electrical conveyance ("EV") stocks.

Lucid continues to ramp up accumulation while taking its clip to decently nutrient and present these electrical vehicles. It seems that Lucid is obsessed pinch value astatine nan infinitesimal complete earthy output. Perhaps Lucid wants to make nan "perfect EV" to use from connection of mouth.

Declining Reservations Is Misleading

One of nan bearish sentiments during nan Q4 2022 net telephone was nan diminution successful reservations. Lucid reported 28,000 reservations, which is down importantly from nan previously quoted 34,000.

However, I judge this is simply a macro rumor that's tied to nan wide economy. Many consumers would alternatively prevention their rate during these unsure economical times alternatively of splurging connected a $100,000+ electrical car.

Lucid has yet to standard its cheapest EV, nan Lucid Air Pure, and I'm not amazed consumers are backing distant from an EV priced good complete $100,000.

The 28,000 reservations do not see nan 100k bid from Saudi Arabia, truthful I judge Lucid has respective quarters to fulfill nan existent demand.

128,000 reservations is simply a much meticulous number, but Lucid won't beryllium capable to fulfill request until nan Saudi mill is complete.

LCID Shares Are Approaching Fair Market Value

During its early CCIV days, Lucid banal was caught successful a monolithic EV bubble that popped during nan 2022 tech banal crash. However, nan caller selloff makes LCID banal look highly charismatic nether $9.

The institution exceeded its accumulation extremity successful 2022 and could do nan aforesaid successful 2023. If Lucid produces complete 14,000 EVs, past yearly gross could deed $1.35 cardinal for 2023.

LCID banal could waste and acquisition astatine a guardant P/S ratio of 12 by nan extremity of nan year. As agelong arsenic nan Fed continues hiking liking rates, past EV stocks won't soar to nan satellite anytime soon.

LCID banal would beryllium reasonably weighted astatine astir $6 per stock if we utilized nan Tesla, Inc. (TSLA) P/S ratio of 8 arsenic an manufacture benchmark.

Buying Lucid banal now would mean paying a 33% premium connected its existent adjacent value, but I don't expect LCID banal to autumn beneath its semipermanent support level of $6.

Risk Factors

Will Lucid Group, Inc. spell bankrupt and retired of business? I deliberation that's nan main interest for semipermanent LCID bulls. While nan institution made a immense betterment successful position of nett losses successful 2022, I don't spot immoderate chance of affirmative EBITDA until Lucid tin nutrient EVs overseas astatine a overmuch little cost.

Gross margins are antagonistic 58 percent, which is simply a look for disaster. I'm not judge erstwhile nan institution will really make a profit connected immoderate of its vehicles.

Lucid whitethorn dilute shareholders pinch much banal income aliases request nan Saudi PIF to bail them retired erstwhile rate runs low.

The bully news is that nan Saudi PIF has heavy pockets, and moreover Cristiano Ronaldo moved to Saudi Arabia to subordinate nan Saudi Pro League successful 2022.

Saudi Arabia has a agleam future, and they whitethorn beryllium consenting to propulsion an unlimited magnitude of rate astatine Lucid Group, Inc. to support it afloat. The Saudi PIF presently owns 65% of LCID communal stock, but guidance wouldn't remark connected a imaginable buyout.

Be Greedy When Others Are Fearful

Lucid produces nan champion EV connected nan satellite astatine nan moment, yet nan institution is trading adjacent penny banal value ranges. LCID is still my favourite multi-year banal prime owed to its awesome Lucid Air electrical conveyance and debased wide marketplace headdress erstwhile compared to nan likes of Tesla.

I'm continuing to accumulate shares to trim my wide costs ground by averaging down. My mean costs ground is $21, truthful I person a batch of activity to do to get my mean costs ground down.

I'm being greedy erstwhile others are fearful moreover though nan early for Lucid Group, Inc. is unclear astatine nan moment. I retrieve really early Tesla investors felt successful nan beginning, which is why buying Lucid stock could beryllium for illustration betting connected Tesla's IPO successful 2010.

With awesome consequence comes awesome reward, and I don't mind betting connected nan shaper of nan champion EV connected nan planet, moreover if everyone other thinks I'm wrong.

Investor Trip is simply a world finance organization that focuses connected hypergrowth assets for illustration maturation stocks and cryptocurrency. Our finance strategy is to place sectors pinch monolithic maturation imaginable past prime nan biggest & champion companies that will go early winners. We talk some US & world stocks arsenic good arsenic precocious performing assets specified arsenic Bitcoin. Follow america to person notifications whenever a caller article is published.