Lucid Group shares upbeat Q2 sales numbers
Lucid Group Inc. saw its shares get a hefty bump in early trading Tuesday after the electric vehicle maker released its second quarter financials, bringing in sales revenue that easily exceeded Wall Street expectations, as well as announcing that it has more funding on the way.
What’s more, the company said it would receive another huge investment of as much as $1.5 billion from an affiliate of the Saudi Arabia-based Public Investment Fund, which has been one of Lucid’s prime backers since day one, in order to help it prepare for the rollout later this year of its much-anticipated Gravity luxury SUV.
Newark, California-based Lucid (Nasdaq: LCID), which manufactures its EVs at its factory south of Phoenix in Casa Grande, reported that it had $200 million in sales revenue during Q2, easily exceeding Wall Street consensus estimates of $184 million, according to Bloomberg.
Lucid shares zoomed out of the gate on Tuesday on the stronger-than-anticipated revenue numbers, gaining 9.5%, or 28 cents, to $3.28. Lucid shares had lost 3.8% of their value during Monday’s brutal trading session that saw all major stock indices take a huge hit.
The company had already seen its stock get a hefty bump in early July when it pre-released its production numbers (2,110 units) and vehicle deliveries (2,394) for Q2. The company on Monday reiterated its production guidance for the year, saying it would manufacture 9,000 vehicles in Arizona. The company said it rolled 3,838 vehicles off its Casa Grande assembly line through June, meaning it will have to push past 5,100 new vehicles in the second half of the year to meet its forecast.
The company has plenty riding on the introduction of its $80,000 Gravity SUV, amid the overall softening of EV sales. Lucid CEO Peter Rawlinson gave investors the first look at pre-production models of the Gravity being produced in Casa Grande in late July.
During a Monday afternoon conference call with analysts, Rawlinson said the company plans to go full speed ahead on rolling out the Gravity alongside its flagship Lucid Air luxury sedan at the Pinal County factory.
“As I’ve noticed previously, production is not our bottleneck and we are managing production to prudently optimize cash flow and to match deliveries,” Rawlinson told analysts. “Just last week, I had the honor of driving the first pre-production Lucid Gravity off the production line — a key milestone in the journey to the scheduled start of production later this year.”
Rawlinson also noted that the company has introduced a rear-wheel lower-priced version of the Lucid Air sedan known as the Lucid Air Pure, with a base price of just under $70,000 and a range of 420 miles. Rawlinson also reiterated that the company is targeting mid-2026 to introduce its entry-level, lowest-priced EV.
Though Lucid reported a loss of 34 cents per share, worse than Wall Street expectation of a loss of 27 cents a share, Barron’s noted that because the company hasn’t yet reached the kind of manufacturing scale to move it into profitability, shareholders are looking past those numbers to focus squarely on the demand for vehicles and consistent unit pricing, that will prop up sales revenue. So far in 2024, the EV market has faced softer demand, a trend that has translated into lower prices to attract consumers, which ultimately stifles top-line revenue.
As for the Saudi-backed capital infusion – the other news that attracted investors’ attention – the funding is tied into a pair of agreements with Ayar Third Investment Co. On one hand, Ayar will acquire $750 million worth of convertible preferred Lucid shares, and in a separate agreement, it will provide a $750 million unsecured loan to the automaker.
This is the second time this year Ayer Third Investment has stepped in to provide a jolt of financing to Lucid, having already agreed in March to purchase $1 billion worth of convertible preferred stock.
Lucid reported that it had about $4.3 billion in cash on hand at the end of Q2, and that it burned through $1.5 billion in cash through the first six months of 2024, hence the need for the latest Saudi investment.
Barron’s also reported that Lucid shares are down more than 90% from its record highs in 2021 when startup EV companies were definitely favored by investors.
The company had about 2,500 employees in Casa Grande following a layoff of about 1,000 workers last year, the Business Journal previously reported. During Monday’s call with analysts, Interim Chief Financial Officer Gagan Dhingra said the company took a $20 million charge during Q2 related to its announcement in May that it would lay off about 400 workers – mainly administrative and mid-level management employees – including about 60 salaried workers in Arizona.