If you believe the situation can’t get any worse for Lucid Group (NASDAQ:LCID), think otherwise. At least, based upon the latest news with LCID stock. Last week, the struggling EV maker reported its latest production and delivery numbers.
Saying the figures were disappointing is putting it lightly. Once again vindicating the bear case laid out by the skeptics, Lucid fell short with both metrics.
Both figures were underwhelming, yet one the two in particular signals more trouble ahead for the company.
It’s become even harder to believe that this once promising EV contender can live up to its already walked-back guidance for 2023. Much less, make a major comeback after over promising and under delivering (literally and figuratively) over the past two years.
Although shares have only pulled back slightly on this news, don’t assume the market has absorbed it.
| LCID | Lucid Group | $7.98 |
LCID Stock and the EV Maker’s Latest Numbers
On April 13, Lucid Group announced its production and delivery results for the quarter ending March 31 (Q1 2023).
In Q1, the company produced 2,314 vehicles. This represented around a one-third drop in production compared to the 3,493 vehicles produced during the preceding quarter.
However, this wasn’t the most concerning aspect of the report in the eyes of LCID stock investors. During the quarter, the EV maker delivered just 1,406 vehicles.
Not only did this figure fall short of analyst estimates (2,000 vehicles). Just like the production figure, this represented a sequential decline, as Lucid managed to deliver 1,932 of its vehicles for the quarter ending Dec. 31, 2022.
Sure, on a percentage basis, the deliveries drop was less severe than the production drop. Yet while a quarter-over-quarter decline in production might be chalked up to production hiccups or some sort of other temporary hiccup, declining deliveries are a different matter.
As I’ve discussed previously, Lucid’s reservation numbers have been trending lower in recent months. Now, with these latest delivery numbers, we know full well that the EV maker is facing a serious softening of demand.
The Next Shoe to Drop
LCID stock hasn’t performed too badly following this latest development. While shares fell by around 6.3% on the day of the announcement, the stock is finding support, and is now back near where it was just prior to this most recent news.
However, while holding steady for now, the next big drop for Lucid may be only a few weeks away.
On May 8, Lucid will release its Q1 2023 financial results. The market (with the aforementioned Q1 production/deliveries release) already knows that Lucid’s top line will likely fall short of prior estimates.
Still, the upcoming earnings release could have a few surprises, and I’m talking about pleasant ones.
Besides missing on quarterly revenue, the company could end up reporting heavier net losses than the sell side currently expects (38 cents per share). This will also mean heavier-than-expected cash burn.
Analysts already expect Lucid to run through a sizeable chunk of its existing cash position (around $3.9 billion), requiring further dilutive capital raises.
However, if this cash burn figure exceeds today’s forecasts, the market could send LCID down lower, to account for an even heavier amount of likely future shareholder dilution.
Bottom Line
Lucid Group’s management may do all that they can to spark a comeback, but it’s clear one has yet to take shape. So far, efforts like discounting and advertising have failed to do the trick. Alongside what it is doing to boost demand for its vehicles, management is also attempting to get cash burn under control.
For example, at the end of last month, the company announced it was laying off 1,300 employees. Still, while this will undoubtedly result in a few hundred million in annual cost savings, that’s a drop in the bucket compared to the billions Lucid will likely incinerate between now and the end of the year.
With falling demand and persistent cash burn, the situation with LCID stock continues to move from bad to worse. If you currently own it, make your exit immediately.
LCID stock earns a D rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.