Lucid: A High-Risk, High-Reward EV Play

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Lucid: A High-Risk, High-Reward EV Play

seekingalpha2021-09-06

Summary Lucid Group could make a splash in the luxury EV sedan market. If Lucid Air, the EV maker's first product, has a good reception in the market, sales could ramp up quickly. The September ...

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Henrytheking
·2021-09-07
Ok
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LohYK
·2021-09-06
Very high risk
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stingray102
·2021-09-06
Ok
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Eddie318
·2021-09-06
Yes, I have faith in this company.
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- Stylerz:
  not far away
  2021-09-08
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- stingray102:
  ok
  2021-09-06
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While Lucid is not established in the EV market yet, commercial success of its luxury EV sedan could drive a major revaluation of the company’s shares.\nLucid: A high-risk, high-reward situation\nThere are clear risks when investing in a company that has no established product and that lacks commercial market success. But while there are big risks with Lucid, an investment in the firm also creates the possibility for big upside for early investors that take a chance on an innovator with a new, exciting product within a growing niche.\nLucid could make a splash with its first ever EV product which is expected to roll off factory belts in the coming months. While Lucid also invests in energy storage solutions, the focus of this article is on Lucid’s first production car, the Lucid Air… which could help the EV maker establish itself as a force to be reckoned with in the luxury EV segment. Lucid Air is an all-electric sedan with 480 hp, with a top speed of 168 mph and a projected travel range, for its base version, of approximately 400 miles.\nThe EV maker has so far received more than 10,000 qualified reservations for its first-ever EV model, which is not bad for a company’s first production vehicle.\nSource: Lucid Group\nBesides the base model, Lucid also offers variations of the Lucid Air with different specifications, most notably the “Dream” edition which offers buyers almost 100 miles higher range and more than double the horsepower than the base version. In September, Lucid will give the media and analysts access to its Arizona manufacturing plant, named AMP-1, to witness the production process first-hand and go on test drives. Lucid’s AMP-1 manufacturing facility creates capacity to produce 53,000 vehicles annually. With interest in electric vehicles ramping up and more start-ups entering the space, Lucid could benefit from positive press/analyst coverage in September, which could result in an increase in paid reservations. The delivery timeline for Lucid’s different Air models and the specifications can be seen below…\nSource: Electrek\nOne strong selling point that differentiates Lucid from other electric vehicles is the combination of luxury and performance aspects in the under-served premium sedan market. Compared against other models in the premium sedan segment, for example models from Mercedes, Lucid offers a better cost-value relationship: The Lucid Air is cheaper than comparable luxury sedans from Mercedes, including AMG versions, while offering competitive performance. The combination of performance and value could help Lucid establish itself as a luxury green-energy alternative to other premium sedans.\nSource: Lucid\nLucid does not yet have a product which generates risk. Like every other EV company in the development stage, Lucid has no revenues, only significant losses, but this is going to change as soon as first deliveries are made and the EV maker works to satisfy reservations. FY 2022 is going to be a very important year for Lucid as the firm will see a big ramp in production capacity and start to generate revenues. FY 2022 will see continued losses, but, if the Lucid Air catches on in the premium EV sedan segment, shares of Lucid are going to trade based on increasingly bright prospects.\nSource: Lucid\nDue to accumulated losses related to the development of the Lucid Air, among other things, Lucid has a net negative equity of $1.7B. The company also has about $1.7B in liabilities and will likely have to raise equity to finance the production ramp and the market introduction of the Lucid Air.\nSource: Lucid\nWith no operations and no revenues, it is difficult to value Lucid. Projections and the timing of deliveries are also wildcards and don’t make it much easier to derive a fair value for Lucid. But assuming that 10,000 reservations turn into 10,000 real customers that pay, at a minimum, the full price for the base model, the Lucid Air, the EV company is about to generate $699M in revenues in the short term.\nDepending on what buzz Lucid generates at the marketing event in September, Lucid could see a strong increase in reservations as most people are likely still unaware of the premium electric sedan model Lucid offers. Assuming that Lucid, five years out, sells an amount of EVs that approximates the firm’s manufacturing capacity, about 50,000 vehicles annually, the EV maker could generate yearly revenues of $3.5B. This calculates to a market-capitalization-to-sales-ratio of 9.0x... which is not an outrageously high sales multiplier factor to pay for EV-related sales growth.\nData by YCharts\nRisks with Lucid\nThere are many. The Lucid Air might fail, get bad reviews, be subject to a safety recall or a thousand other things could go wrong as Lucid is not a company with extensive manufacturing experience. The financials also look like you would expect them to look, understanding that we are dealing with a company in the development stage. Future revenues are uncertain and largely depend on the market reception of the Lucid Air. Lucid is a stock you might want to own for the upside, but you don’t want to put all of your money into this stock. Risks are still numerous, but the upside, if things go right, is great.\nFinal thoughts\nI really like Lucid’s approach to corner the luxury sedan segment… which appears to be under-served. The opening of the AMP-1 facility to the public in September could create a lot more demand for the Lucid Air luxury sedan and with actual deliveries not far away, shares of Lucid can revalue higher.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":880932030,"gmtCreate":1631007406720,"gmtModify":1676530440788,"author":{"id":"3560845255540489","authorId":"3560845255540489","name":"Henrytheking","avatar":"https://static.tigerbbs.com/55a042fa32da94eee2a611ec3a2de1b8","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3560845255540489","authorIdStr":"3560845255540489"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/880932030","repostId":1193270400,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":817353312,"gmtCreate":1630911547136,"gmtModify":1676530418636,"author":{"id":"3568070265339857","authorId":"3568070265339857","name":"LohYK","avatar":"https://static.tigerbbs.com/d6add0343094f5e965e831fa432314ef","vip":1,"hat":"https://static.tigerbbs.com/b0a2963eb37c60c5d6d4a8dbcd266952","crmLevel":8,"crmLevelSwitch":1,"idStr":"3568070265339857","authorIdStr":"3568070265339857"},"htmlText":"Very high risk","listText":"Very high risk","text":"Very high risk","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/817353312","repostId":1193270400,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":817389203,"gmtCreate":1630907200702,"gmtModify":1676530417879,"author":{"id":"3559604919356928","authorId":"3559604919356928","name":"stingray102","avatar":"https://static.tigerbbs.com/547c93575fd0fd499d515ad2092a2e9d","vip":1,"crmLevel":7,"crmLevelSwitch":0,"idStr":"3559604919356928","authorIdStr":"3559604919356928"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/817389203","repostId":1193270400,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":817315707,"gmtCreate":1630906722209,"gmtModify":1676530417797,"author":{"id":"3575110265749823","authorId":"3575110265749823","name":"Eddie318","avatar":"https://static.tigerbbs.com/64935bcbea3cb0f19632a043b5c4f663","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3575110265749823","authorIdStr":"3575110265749823"},"htmlText":"Yes, I have faith in this company.&nbsp;","listText":"Yes, I have faith in this company.&nbsp;","text":"Yes, I have faith in this company.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/817315707","repostId":1193270400,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5790071,"gmtCreate":1631077032790,"gmtModify":1631884910259,"authorId":3577619205438357,"author":{"id":3577619205438357,"idStr":"3577619205438357","authorId":3577619205438357,"name":"Stylerz","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":817315707,"type":1,"supId":0,"prevId":0,"content":"not far <u>away</u>","text":"not far <u>away</u>","html":"not far <u>away</u>"},{"id":5768396,"gmtCreate":1630907196431,"gmtModify":1631884910249,"authorId":3559604919356928,"author":{"id":3559604919356928,"idStr":"3559604919356928","authorId":3559604919356928,"name":"stingray102","avatar":"https://static.tigerbbs.com/547c93575fd0fd499d515ad2092a2e9d","vip":1,"crmLevel":7,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":817315707,"type":1,"supId":0,"prevId":0,"content":"<u>ok</u>","text":"<u>ok</u>","html":"<u>ok</u>"}],"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":24,"commentSize":4,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}