Lucid Group Analysts Break Down Q2 Earnings, $1.5B Saudi Financing For EV Stock: 'We See This Capital Raise As Significant'

Electric vehicle Lucid Group LCID gets praise from analysts for its updated financing, vehicle launch timeline and superior technology after reporting second-quarter financial results.

The Lucid Analysts: Needham analyst Chris Pierce reiterated a Hold rating and has no price target on the stock.

Cantor Fitzgerlad analyst Andres Sheppard upgraded shares from Underweight to Neutral and reiterated a $4 price target.

RBC Capital Markets analyst Tom Narayan reiterated a Sector Perform rating and $3 price target.

Stifel analyst Stephen Gengaro maintained a Hold rating and $3 price target.

Needham on Lucid: The second-quarter results showed that technology might not be enough with production not increased, Pierce said.

"We are believers in LCID's industry-leading EV efficiency technology, which allows for industry-leading mileage ranges on lower battery sizes, but LCID opted against increasing FY24 vehicle production despite 1H strength," Pierce said.

The analyst said demand uncertainty could now be an overhang on Lucid stock.

An upcoming investor event at the company's Arizona production facility in September and the launch of the Gravity SUV in early 2025 could serve as catalysts for the company and stock.

An additional $1.5 billion investment from Saudi Arabia's Public Investment Fund (PIF) could eliminate short-term equity concerns, but Pierce sees the need for more.

"We still model $7B in additional capital needs, and we don't assume profitability until FY29."

Read Also: Lucid Stock Is Trading Higher Tuesday: What’s Driving The Action?

Cantor Fitzgerald on Lucid: The new capital raise from PIF is one reason Sheppard upgraded shares to Neutral.

"We see this capital raise as significant since it extends LCID's cash runway into 4Q25, and in our view, helps to solidify PIF's longer-term commitment to LCID," Sheppard said.

The analyst said PIF has invested around $8 billion in Lucid since 2018 and the new $1.5 billion capital injection is "material" and shows a commitment.  

Sheppard raised the delivery estimate for fiscal 2024 from 8,246 units to 8,865 units.

"We continue to believe that Lucid's vehicles are able to provide greater battery efficiency, longer battery range, better performance, and faster charging relative to other passenger EVs."

RBC Capital on Lucid: The PIF financing and an update on the Gravity SUV launch were the two big takeaways from the second-quarter earnings for Narayan.

"Given the extra liquidity cushion provided by the deal and investor focus on the liquidity topic as well as on how committed PIF is to Lucid's long-term success, we could see shares trade up sharply on this news," Narayan said.

The Gravity SUV is expected to start production in 2024 and reservations should begin before production starts, the analyst said.  

"We should get some indication of demand, therefore, in the Q3/24 timeframe and expect deliveries to begin in Q1/25."

Stifel on Lucid: The second-quarter report from Lucid was positive with revenue beating estimates, Gengaro said in a new investor note.

"LCID delivered mixed 2Q24 results with revenue easily outstripping our estimate by 20.2% while adjusted EBITDA of -$648 million lagged our -$527 million projection," Gengaro said.

Key takeaways from the earnings report for the analyst include 2024 production reiterated at 9,000 vehicles, the Gravity SUV remaining on track for late 2024 production and cost optimization programs leading to lower spending.

Gengaro said a lower average selling price per unit in the second quarter could be the result of the lower-priced Lucid Air Pure rear-wheel drive seeing strong demand.

The analyst said technology was a well-covered topic during the earnings conference call.

"Management remains confident that its technology is well ahead of its peers, which we believe provides a key competitive advantage for Lucid."

LCID Price Action: Lucid shares are up 2% to $3.06 Tuesday versus a 52-week trading range of $2.29 to $7.30. Lucid stock is down 27% year-to-date in 2024 and down 52% over the last year.

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