Will the PIF Buy Lucid? LCID Stock Price and LCID Earnings Q4 2022
Will the PIF Buy Lucid? LCID Stock Price and LCID Earnings Q4 2022
Join Patreon: / drstock (Research and tier updates coming soon!)
Join Webull: https://a.webull.com/DAkNeY2r2ZtFP9gjZ5
Join MooMoo: https://j.moomoo.com/00vuz5
@Dr. Stock
Facebook: / thedrstock
Instagram: / thedrstock
Twitter: / thedrstock
TikTok: / thedrstock
There has been rumor recently of the PIF from Saudi Arabia to buy out and privatize Lucid Motors (LCID). The rumor spiked the stock price, nearly doubling it from a low of $8.91 to a high of $17.81 before falling back down to its closing price of $12.87, about 48% above the previous close. A price jump on the speculation of a company buyout implies that the market believes that the company will be purchased for a premium above the current market price.
I have taken the time to crunch the numbers on Lucid for a 2022Q4 earnings estimate based on the number of deliveries and past revenue performance. This estimate does not include total production for Lucid as they have not successfully delivered all 7,000+ EVs that they have produced, thus excluded from quarterly revenue. In the spreadsheet you will also find the full-year 2022 revenue estimate constructed from the first three quarters of 2022 and my 2022Q4 estimate.
According to my calculations and estimates, Lucid is currently paying $1.84 for every dollar of revenue. This is constructed from limited data given that 2022 was Lucid's first year of production in every quarter. It should also be noted that they are in a significant ramp-up phase which will be capital intensive for the foreseeable future.
At the last closing price of $12.87 on January 27th, LCID would have a projected price-to-sales (P/S) ratio of 37.8 based on my projections. That means that investors are paying about $37.80 per dollar of revenue. I have also projected deliveries through 2026 assuming a 5x in deliveries for 2023, and 2x in deliveries for the subsequent 3 years (2024, 2025, and 2026). These estimates are in line with production capacity targets and capabilities, and assume that the delivery count approaches the production count (i.e. demand remains strong). There is a chance for a demand drag should we see a recession in the coming quarters. By these projections, Lucid achieves a P/S of 0.96 by 2026 at $12.87. By my estimates, Lucid will have earnings of ($0.34) basic or ($0.38) diluted for Q4 of 2022, which equates to ($0.84) basic or ($1.47) diluted for 2022.
In order to achieve this, Lucid has to temper cost of revenue to become profitable. This early in their time as a company, it is not clear that Lucid will get there. Future earnings should be watched to see how the trend towards profit is progressing. Lucid also has a high cash burn rate, about $1.6B for 2022 by my estimates, they have cash enough to survive at lease another 2 years, but will likely have to raise more capital, which will likely further dilute shares. It is noteworthy to point out that Lucid's assets currently outweigh their liabilities.
It is likely that Saudi Arabia would like to have direct skin-in-the-game ownership in the EV space, especially given the uncertainty of oil's future, and they are already heavily invested in Lucid (See this article for more). It would be reasonable that they would shell out the cash necessary to pull down an EV company that is already pulling strong brand recognition in the US, Canada, and moving into European markets. Since they are already the majority share holder, they would accept their own offer to sell and take the company private.
Dr. Stock’s content is for entertainment only. In no event will Dr. Stock be liable for any loss or damage including, without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of Dr. Stock content on YouTube. Dr. Stock is not a licensed broker/financial planner. All financial decisions made by the viewer should be done after talking with a licensed professional. Dr. Stock’s video content may change over time, or become outdated or invalid. Dr. Stock reserves the right to change his opinions and entertainment content at any time. Happy trading! Let's all strive for financial freedom!
#LCID #PIF #Earnings
