Lucid: Scary Financials

Gregg DeGuire

Introduction

My thesis is that nan financial statements for Lucid (NASDAQ:LCID) are frightening.

At nan clip of this writing, €100 is balanced to $107.

The Numbers

The Lucid 4Q22 results show that they produced 7,180 vehicles successful 2022 but they delivered little than 2/3rds of this number - 4,369 vehicles. Lucid's 2022 gross was $608.181 cardinal pinch a costs of gross of $1,646.086 cardinal for a gross profit of $(1,037.905) million. The gross useful retired to astir $139,162 for each car delivered.

Per nan 4Q22 call, they are not going to get to standard anytime soon arsenic they are forecasting a 2023 accumulation scope of conscionable 10,000 to 14,000 vehicles. Ferrari's (RACE) 2022 20-F shows that they only shipped 13,221 cars successful 2022 but they are apples and oranges comparative to Lucid. Ferrari's gross profit for 2022 was €2,446.301 based connected gross of €5,095.254 million. Ferrari brings successful astir €385,372 successful gross for each car shipped. Ferrari enjoys astir 3 times arsenic overmuch gross per car truthful they tin do galore things that different carmakers can't. Ferrari's economics are for illustration a luxury retailer whereas Lucid's economics are those of a carmaker. Lucid cars are much costly than astir but they don't person nan pricing powerfulness to person Ferrari type margins; Lucid needs scale.

The supra income connection figures for Lucid are plentifulness frightening but nan rate travel connection is worse. A 2012 article talks astir nan measurement bequest carmakers utilized misleading accounting practices earlier nan financial situation to inflate gross margins successful nan income statement. I'm not saying Lucid is doing this but it is worrisome that their transportation numbers are importantly worse than their accumulation numbers. I judge their free rate travel ("FCF") is much meaningful than their nett nonaccomplishment from nan income statement.

The 2022 10-K shows a rate travel connection that is beyond scary. Cash mislaid successful operating activities for 2022 was $2,226 cardinal and location was capex of $1,075 cardinal specified that free rate travel ("FCF") was $(3,301) million:

cash travel connection (2022 10-K)

This FCF nonaccomplishment of $3,301 cardinal is overmuch worse than nan nett nonaccomplishment we spot connected nan income statement. The supra demolition of rate was much tolerable a twelvemonth agone erstwhile liking rates were little and it was easier to borrow.

Valuation

Today's valuation is nebulous fixed nan wide scope of imaginable outcomes. Unless Lucid is taken backstage aliases acquired soon astatine a premium past my emotion is that LCID banal has small to connection astatine this time. The 10-K shows a stock count of 1,830,450,459 arsenic of February 22nd. Multiplying this by nan March 6th stock value of $8.82 gives america a marketplace headdress of $16.1 billion. The equilibrium expanse consists of $1,736 cardinal successful rate and equivalents positive $2,177 cardinal successful short word investments. Partially offsetting this is $1,992 cardinal successful semipermanent indebtedness on pinch $244 cardinal successful semipermanent lease liabilities which dress up nan bulk of nan different semipermanent liabilities line. Given these equilibrium expanse considerations, nan endeavor worth is simply a fewer cardinal beneath nan marketplace headdress but that rate is burning quickly.

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