Despite falling short of Wall Street expectations, electric-vehicle start-up Lucid Group's latest earnings report provided some reasons for optimism. While the company reported a second-quarter loss of 40 cents per share on sales of approximately $151 million, analysts were projecting a loss of 34 cents per share on sales of $182 million.
Following the announcement, Lucid's embattled shares received a boost and saw an immediate increase in value. However, maintaining these gains has been a challenge, as the stock struggled to hold onto its positive momentum in early trading on Tuesday. Currently, shares are relatively unchanged, while S&P 500 and Nasdaq Composite futures are both down around 0.5%.
Positive Developments Amidst Challenges
Although missing earnings expectations typically results in a decline in stock value, Lucid's quarterly report contained some positive indicators. The company reiterated its commitment to producing more than 10,000 units, consistent with the guidance provided in May. This reaffirmation is noteworthy considering that earlier in the year, analysts had anticipated production numbers closer to 20,000 units.
Factors Impacting Stock Performance
It is worth noting that Lucid has faced challenges in recent months. The company's decision to implement price cuts, announced earlier, caused a decline in stock value during Monday's regular session, with shares closing with a 3.2% drop. However, it is possible that this factor is mitigating further losses ahead of the stock market opening on Tuesday.
Despite these hurdles, it is essential to consider the broader context. Lucid stock has endured a difficult period, with a year-to-date decline of approximately 6% and a steep drop of about 64% over the past 12 months.
In conclusion, while Lucid Group's earnings fell short of expectations, there are positive elements within their quarterly report that offer hope for the company's future. Their commitment to production targets and proactive measures taken suggest a potential turnaround in the challenging electric-vehicle market.
Lucid's 2Q 2023 Production and Deliveries Fall Short of Expectations
In a recent report, Cantor Fitzgerald analyst Andres Sheppard expressed disappointment with Lucid's production and delivery numbers for the second quarter of 2023. The company's performance failed to meet their estimates, with production in 2Q even falling below 1Q levels.
During the first half of 2023, Lucid managed to sell 2,810 vehicles, while producing 4,487. This delivery lag behind production figures is a cause for concern for any automaker.
However, Sheppard maintains a positive outlook on the stock and has rated it as a Buy with a $10 price target. He believes that deliveries to Saudi Arabia in the third quarter will help improve results.
Lucid's current production guidance is focused on the sales of their Air sedan. Additionally, they have plans to unveil their Gravity SUV in November, with production set to commence in late 2024.
At the end of the quarter, Lucid had over $5 billion in cash on hand. They had utilized around $900 million for business development during the second quarter.
Wall Street estimates suggest that Lucid will continue to utilize approximately $1 billion each quarter. Positive free cash flow is not projected until later in the decade and is reliant on increasing sales.