The purpose of this memo is to counter the prevailing bearish sentiment that has been dominating the media lately. If you're feeling overwhelmed by the negative commentary about $LCID
, let me clarify that I'm writing this memo in response to an article
I saw on CNBC's front page, which I think exaggerated the situation.
If we take a step back and look at the big picture, Lucid Motors as a business is rapidly growing.
- For FY21, Lucid's revenues were $27 million (source)
- For FY22, Lucid's revenues are above $608 million (source)
That's revenue growth of 2,151.851% on a YoY basis!!!!
What's even more exciting is that Lucid's delivery numbers, on an annual basis, are up by 3,395%!!!!
- For FY21, Lucid delivered 125 vehicles (source)
- For FY22, Lucid delivered 4,369 vehicles (source)
Of course, with surging deliveries, you're also going to have surging costs. The auto business isn't the same as the software business in terms of scalability. Some see the surging costs and conclude that the company is on the road to bankruptcy. Consider what Sherry House, CFO of Lucid Motors, has to say about the growth of expenses the firm has been dealing with:
"As we produce vehicles at low volumes and production lines designed for higher volumes, we have and we will continue to experience negative gross profit related to labor and overhead costs." (source: Koyfin)
For those wondering if these growing costs will lead the firm into bankruptcy, House also says this:
"Regarding our liquidity position, we ended the quarter with approximately $4.9 billion in total liquidity, which we believe provides sufficient capital at least into the first quarter of 2024." (source: Koyfin)
Those who question the credibility of the CFO should ask themselves this question: "If I can't trust what management is saying, do I even trust the company in the first place?"
I don't see why people would have distrust for the management team. Hindenburg Research hasn't made a research report about Lucid Motors. I don't see other notable short sellers accusing the company of fraud. Their product, the Lucid Air, is such a great product that Motortrend is willing to risk their reputation to call the Air the 2022 Motortrend Car of the Year
Overall, I see a rapidly growing business that's doing its best to handle its unprecedented growth as best as it could. While Powell's speech and the overall sentiment that a recession is on the horizon is deterring investors from holding $LCID
shares, since Lucid caters to the wealthy, I think that they will do better than their peers. Personally, I'm seeing Lucid Air vehicles starting to fill the streets. The vibe I'm getting with seeing Lucid Airs becoming more frequently on the road today reminds me Tesla's growing presence back in 2012. $RIVN
is also giving me "Tesla 2012" vibes too as their pickup trucks and SUVs start becoming a common thing I see in my morning commutes.
Sure, the era of free money is over, and I see that impacting the direction of Lucid Motors. Maybe Lucid Motors will aim to become the "Ferrari of electric vehicles" than attempt to go mass market because of how expensive it would be to expand production capacity. Or maybe it will follow one of its startup peers in China named Xpeng $XPEV
, an EV startup looking to develop flying cars