Why are shares of Lucid Motors down 15%?
Lucid missed on earnings and cut its 2022 vehicle production forecast by as much as 40%. Investors need to decide if Lucid can carve out a healthy slice of the EV market as it goes up against established automakers.
Shares of Lucid Motors (LCID) have been slumping over the last two days after the electric-vehicle (EV) maker missed on earnings and slashed its 2022 vehicle production forecast.
Lucid stock started falling after-hours trading Monday following the company’s release of its fourth-quarter earnings and 2022 outlook and continued its decline through Wednesday.
Here’s what happened and what Lucid investors can expect in the year ahead.
Why is Lucid stock falling?
Investors have been skittish since Lucid reported fourth-quarter 2021 earnings that missed Wall Street estimates and issued and underwhelming vehicle production forecast for 2022.
For the quarter, Lucid posted a loss of $1 billion, or 64 cents per share, nearly double the loss of 35 cents per share analysts had estimated. It lost $4.75 billion total in 2021.
In conjunction with reporting its fourth-quarter results, Lucid announced that it’s cutting its car production forecast for the year by as much as 40%. The company said when releasing its third-quarter 2021 earnings that it remained “confident in our ability to achieve 20,000 units in 2022.” The company cited supply chain constraints and logistics issues for slashing production. “Looking ahead, we’re updating our outlook for 2022 production to a range of 12,000 to 14,000 vehicles,” Lucid CEO Peter Rawlinson said in a statement. “This reflects the extraordinary supply chain and logistics challenges we’ve encountered and our unrelenting focus on delivering the highest-quality products. We remain confident in our ability to capture the tremendous opportunities ahead given our technology leadership and strong demand for our cars,” Rawlinson added.
On a call with investors Monday, Rawlinson said the supply chain problems the company is facing stem from just a handful of its 250 suppliers and center around commodity parts such as glass and carpet. Rawlinson said these constraints were not affecting semiconductor or battery availability, which has been a major hindrance to vehicle manufacturers over the last two years.
While Lucid’s earnings and forecasts fell short, the company is expanding and believes it’s in a good position to capture a share of the growing EV market.
Lucid met its target of opening 20 Studio and Service locations in North America in 2021 and confirmed plans to build its first international assembly plant in Saudi Arabia. Rawlinson said the plant is expected to begin production in 2025 and will add up to 150,000 vehicles per year to its production.
Reservations now exceed 25,000 units, Lucid CFO Sherry House said during the earnings call, reflecting potential sales of more than $2.4 billion. Lucid had 17,000 of its vehicles reserved as of November. But with only 12,000 to 14,000 vehicles slated for production in 2022, that means at least 11,000 customers won’t take delivery of their cars for at least a year.
Deliveries so far: 300 vehicles
Lucid began delivering its luxury EVs, the Lucid Air Dream Edition, in the fourth quarter of 2021. According to Lucid, it’s delivered 125 vehicles as of year-end 2021 and over 300 deliveries to date. This sent fourth-quarter 2021 revenue soaring 626.25% year over year to $26.4 million.
Lucid also ended the year with $6.26 billion of cash on hand.
Last week, Lucid announced it would be recalling 203 Lucid Air vehicles because of a possible defect in the front strut, after the company was notified by its supplier Bilstein of the potentially affected parts.
Shares of Lucid stock closed Wednesday at $24.58, down 1.64% for the day and 15% since the decline began.
Thinking of buying shares of Lucid?
Shares of Lucid are down 57.% from their November high of $57.75 and the company just cut its 2022 production forecast, almost by half. Going forward, investors need to decide how Lucid will fare against Tesla (TSLA), legacy players like General Motors (GM) and Ford (F) and even fellow EV startups like Rivian Automotive (RIVN), as these companies scramble for dominance in the EV market.
Currently, analysts are torn on the stock. The Hold ratings on Lucid stock outnumber its Buy ratings on Wall Street. But if the stock were to hit the $39.75 price target analysts have given it, investors could still see a 61.72% premium over its current price.
At the time of publication, Matt Miczulski owned shares of LCID, TSLA, GM and RIVN.
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