Feb 24, 2023·edited Feb 25, 2023Liked by Motorhead
Great write up Motorhead! I suspect dilution is gonna happen soon (in Q1). Equity mkt is not getting better as the year goes by and everyone knows market valuations are back to being frothy. If BBBY was able to raise money, I am sure apes will queue up for LCID
I think Peter Rawlinson is a very questionable/unscrupulous man. He said 7K deliveries in 2021, 20K in 2022. He keeps revising those numbers over and over. They have a very poor product market fit , it is not just about brand awareness. They kept releasing reservation numbers when it pumped the stock. In Q4 earnings report, they confirmed they won't be releasing the reservation numbers anymore since it is affecting them negatively. Talk about cherry picking , this is such a sleazy tactic
Btw, in 2022, PIF had promised to buy 100K vehicles from Lucid. If that was factually true and not just a pump, we wouldn't be having a "demand problem" . Coz they could produce all those cars and pretty much sell the ones which cannot be sold in US to Saudi Arabia. What do you think about that?
Thanks for the kind words. And yes, Rawlinson is as much of a sleazebag as Musk. Equally nauseating to listen to on earnings calls. You point out something very interesting: if Lucid isn't production-constrained anymore, why don't they start shipping those 100K orders to Saudi Arabia? Lucid's product is good, but only at a much lower price point. They'll have no choice but to lower prices, which will only inflate the gross losses they generate on each car produced.
They are in a conundrum now. When they had the demand, they couldn't produce at scale. Now that they can make cars at scale, they have no demand. Lowering prices or marketing spend for stimulating demand will only worsen their cash burn although it is better to sell everything they make than have cars sitting in the inventory/idle factories
There is no silver lining here. They cannot cut their CapEx any further. Debt will make things worse. The $5B they need will dilute them by 36% at the current MC? Core Inflation data was bad, next few weeks will be bad IMO. I think stock will move towards its book value (Cash at hand specifically)
E.g. $RIVN is trading at $16B MC and has $14B cash at hand at end of last Qtr. Extrapolating similarily for LCID, would take us to maybe $6B or $6.5B MC which is $4. Except Rivian has a path to success while Lucid doesn't
I think stock goes down to $3-4 after equity offering and eventually bleeds lower and then PIF can take it private (or find someone else to run it if they fire Peter R)
Great write up Motorhead! I suspect dilution is gonna happen soon (in Q1). Equity mkt is not getting better as the year goes by and everyone knows market valuations are back to being frothy. If BBBY was able to raise money, I am sure apes will queue up for LCID
I think Peter Rawlinson is a very questionable/unscrupulous man. He said 7K deliveries in 2021, 20K in 2022. He keeps revising those numbers over and over. They have a very poor product market fit , it is not just about brand awareness. They kept releasing reservation numbers when it pumped the stock. In Q4 earnings report, they confirmed they won't be releasing the reservation numbers anymore since it is affecting them negatively. Talk about cherry picking , this is such a sleazy tactic
Btw, in 2022, PIF had promised to buy 100K vehicles from Lucid. If that was factually true and not just a pump, we wouldn't be having a "demand problem" . Coz they could produce all those cars and pretty much sell the ones which cannot be sold in US to Saudi Arabia. What do you think about that?
https://www.cnbc.com/2022/04/26/lucid-to-deliver-up-to-100000-evs-to-saudi-arabia-government.html
Thanks for the kind words. And yes, Rawlinson is as much of a sleazebag as Musk. Equally nauseating to listen to on earnings calls. You point out something very interesting: if Lucid isn't production-constrained anymore, why don't they start shipping those 100K orders to Saudi Arabia? Lucid's product is good, but only at a much lower price point. They'll have no choice but to lower prices, which will only inflate the gross losses they generate on each car produced.
They are in a conundrum now. When they had the demand, they couldn't produce at scale. Now that they can make cars at scale, they have no demand. Lowering prices or marketing spend for stimulating demand will only worsen their cash burn although it is better to sell everything they make than have cars sitting in the inventory/idle factories
There is no silver lining here. They cannot cut their CapEx any further. Debt will make things worse. The $5B they need will dilute them by 36% at the current MC? Core Inflation data was bad, next few weeks will be bad IMO. I think stock will move towards its book value (Cash at hand specifically)
E.g. $RIVN is trading at $16B MC and has $14B cash at hand at end of last Qtr. Extrapolating similarily for LCID, would take us to maybe $6B or $6.5B MC which is $4. Except Rivian has a path to success while Lucid doesn't
I think stock goes down to $3-4 after equity offering and eventually bleeds lower and then PIF can take it private (or find someone else to run it if they fire Peter R)
Totally agree. I think Rawlinson's days numbered as well.