Written by Cláudio Afonso | LinkedIn | X
CFRA analyst Garrett Nelson released a research note on Thursday, commenting on Lucid’s public offering and third-quarter estimated results announced late Wednesday.
While reiterating the firm’s Sell rating and $2.00 price target on the shares, the analyst sees the decision to do 262.4 million shares offering as “a major red flag” given “the precipitous decline for the stock over the past several quarters”.
Lucid shares closed 18% lower on Thursday at $2.69. Based on the closing price, CFRA’s price target implies an additional downside of 26%.
“We maintain our 12-month target of $2. LCID shares are down ~14% after announcing a common stock offering of 262.4M shares on Wednesday afternoon,” Nelson wrote before analyzing the third-quarter preliminary financial results released by the EV maker.
According to the analyst, the revenue was about $9 million above the consensus estimates while the operating loss will be higher than the consensus forecast of $719 million.
“The company also released preliminary financial results for Q3, saying it generated quarterly revenue of approximately $200M and an operating loss between $765M and $790M, which compare to the consensus estimates of $191M and $719M, respectively,” the analyst noted.
Commenting on the average selling price during the third quarter, Nelson said the company saw “a steep sequential drop” of approximately $12,000 per vehicle.
“Notably, LCID’s revenue implies a steep sequential drop in price realizations of approximately $12K/vehicle,” the analyst wrote.
Lucid said it expects third-quarter revenue to range between $199 million and $200 million, slightly below the $200.6 million reported in the second quarter, despite delivering 387 more vehicles between July and September.
“The company also said its majority stockholder (~59% ownership), Ayar Third Investment Company of Saudi Arabia, intends to purchase 374M shares in a private placement at the same price,”
“While the offering helps boost liquidity, the fact it resorted to issuing equity after such a precipitous decline for the stock over the past several quarters is a major red flag,” the analyst noted.
“With unit costs that are still unsustainably high and EV competition increasing, we reiterate our Sell opinion on the shares,” Nelson concluded.
Additionally, Ayar Third Investment Company, an affiliate of Lucid’s biggest shareholder PIF (Saudi Arabia’s Public Investment Fund) will purchase 374,717,927 shares of common stock from Lucid in a private placement concurrent with the public offering.
Lucid is preparing to start mass production of its second model Gravity late this year. A third model is also in the pipeline for late 2026 and a price target at about $48,000.
The model will target the Tesla Model Y, the world’s best-selling vehicle which will have an upgraded version early next year.
Written by Cláudio Afonso | LinkedIn | X
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