Hey guys, it's sasha, lucid motors, has just announced their first ever quarterly result as a public company, and this morning the share price has gone up even higher up over five percent of 47.20. As i'm recording this video, and so i thought we should talk through. What's happening with lucid talk through the results and discuss some really interesting updates i'll also share my view on lucid stock and where the company is headed. But first, let's talk about the results.

Lucid released a quite nice presentation for the results, actually borrowing another great trick from tesla, and i really wish more companies would do the same. We'll just try a little harder with the information that they present for these quarterly updates, because this not only looks nice and it's not only just easy to read, but it also has quite a lot of useful information in there now a lot of the information. This presentation, and especially information that was shared on the investor call afterwards after the trading hours yesterday is not new, so i won't be discussing things that you probably already know, or you might have heard recently. Details of you know lucid area epa, certification of 520 miles.

They're formula e proven battery technology and all of that mumbo jumbo - i'm gon na give lucid a pass for this being their very first quarterly update as a public company, but hopefully they're, going to be a little bit more specific and a little bit more substantial. You know talking about the current goings on in future updates, rather than just repeating the same thing. Let's see one bit of news that lucid made a really big deal out of in this update was their pre-order numbers. This seems to be the be-all end-all for every ev company, and everyone seems to be completely obsessed with how many pre-orders each company has lucid said that they have 13 000 pre-orders.

As of the end of september for the lucid air, and that went up to over 17 000 pre-orders by yesterday - and that is a great result - they went up from 13 to 17 000 in just a month and a half, and when the data was first published With that as one of the leading new bits of information and when peter rollins and then spoke about it at the beginning, the aftermarket share price for lucid spiked, remember: lucid, is aiming to make 20 000 cars next year. So this data shows that they should easily be able to sell all of them. But here is the issue. I don't think most people who have studied the lucid motors, the business model and the product in any kind of depth really had a question mark around where whether the demand issue is an issue at all most people, i don't think, really had a concern with whether They're going to be able to sell the cars at this low run rate, there's going to be plenty of buyers for their vehicles.

These new evs are so far ahead of any ice car that every car, tesla, lucid or any other serious ev company makes will be immediately sold. That's the situation we're in so it's nice to see that the numbers are there, but to me they don't really prove absolutely anything. They are almost irrelevant. The problem for lucid will be scaling their manufacturing, making a small production run of cars on one production line where a lot of the processors are very manual is a very different game to fully automated very high speed, large scale manufacturing of multiple products on multiple manufacturing Lines an entirely different game, and that's where the next important point in this update for me was not that anyone seemed to notice, because i didn't seem to listen to many people talking about this.

I didn't see this mentioned in news reports. Everyone kind of stopped reading. After the first couple of slides, i think in the summer lucid announced that they are fast tracking, a lot of their capital expenditure that they were planning to do in 2024 and beyond to timelines up to 2023. And this fast tracking will allow them to build the additional factory buildings in the arizona amphon facility and actually already started that construction project.

This will do two things: they want to expand the factory on production from 30 000. That is right now up to 90 000 and that 90 000 includes the lucid air and the new project gravity suv that lucid wants to launch in 2023. So this not only increases capacity but allows them to launch a whole new model as well. Now, in the q, a some questions were asked about this gravity project.

But the responses for me were really pretty vague and i didn't feel assured at all peter said in the presentation that they plan to release and start selling gravity by the end of 2023. But then later when he was asked when the first designs might begin being shown, he said it would probably be end of the next year as the earliest possible target. And for me that doesn't sound great because it only leaves up to one a year from when they reveal the car. For the first time to those cars rolling off the production line of the factory that hasn't even had the foundations laid yet and being sold to customers, and that is a very, very tight time scale.

Even tesla has not managed to do that with the factories that they've been building. There are so many steps in between showing the car. You know having a concept that people can go and look at and that car being in the customer's hands - and i suspect that lucid, won't be sandbagging the timelines. I don't think they already have that ready and they're just not showing it.

I suspect that, given their position as an early stage growth company, they will probably be showing off that new car as soon as it is remotely ready to be shown - and here is the really important bit that is to do with this - the numbers, the profit and Loss statement for lucid motors is basically irrelevant: the company earned 719 000 in the whole of 2021 up to the end of september, so far, basically zero in the grand scheme of things. That's absolutely nothing, but now we get to see the effective starting point for lucid in terms of their balance sheet, and this is where it gets interesting. As of the end of q3, lucid have 4.8 billion dollars in cash on their balance sheet and that pretty much is it there's nothing else really on there of any note, the factory and equipment, which is the only other thing of any size, are basically just some Costs that are still hanging about on the balance sheet, so the process of going public through a spec with that pipe deal on the side has gone and given them that 4.8 billion in cash and according to lucid 4.4 out of that 4.8 billion came from them. Going public so great, they have raised money, but here is the issue.

The operating expenses for lucid and q3 were 500 million dollars, and those operating expenses are only going to increase in the next few quarters, as the company is hiring more people, developing and manufacturing, and so on. Q3 costs are already roughly double what they were in the previous two quarters this year, so that burn rate is increasing fast, and it's going to going to increase a lot faster from here as well. I i think, and selling 20 000 cars in the whole of next year is not really going to make much of a dent in that massive burning cash pile, even if they make a margin of 10 000 per car. That's only going to add 200 million dollars in gross profit, so they spent 500 million dollars last quarter, but their spend is going up really fast.

They've been opening up more and more studios and service centers as well, there's just never-ending stream of new costs. Adding to that pile and as that number is going to go up, lucid is currently looking at running out of cash in q4 next year at the latest, and that is not a long way away and there was one question in the q a related to this. The question asked whether lucid is planning to issue more shares to raise additional funds, because in order to continue going beyond next year, they're going to either have to raise funds through issuing new shares or borrow money. Those are the two options available to them, and here's the thing lucy's share price right now is incredible, even if you're, an investor that share price of 47.48, that it is right now gives them a market cap of something like 77 billion dollars and for a company That is only hoping to reach a run rate of 90 000 cars per year at the end of 2023.

If everything goes perfectly, that is a really great share price. That's really really high that question in the q a asked if they should perhaps raise more money at this valuation, so they can maybe go higher than 90 000 cars or get there sooner and peter rollinson said that even the 90 000 target is still pretty ambitious And here's the thing i completely agree with him that run rate forecast - remember is only in two years time from now and going from basically zero to ninety thousand cars per year in just two years is already a ridiculously good achievement if they get there. If and it's a really big, if because there's going to be a lot of hurdles to overcome for this to go to plan, but the financial issue remains sherry house, the chief financial officer of lucid motors said that the company is not currently looking to issue more Shares, but she did hint very strongly at the fact that the company doesn't currently carry any debt and she alluded to a preference for the company to potentially take on debt over issuing new shares more than once on the earnings score. This is why you need to listen to earnings goals.

They reveal some really really important data, and this this stance is somewhat unusual when a company is in this kind of position, with the valuation that they currently have relative to. You know where maybe they would themselves expect to be. Raising some capital at this point would often be a very smart strategic move. After all, the whole point of being a public company is to be able to raise money from the public markets as and when the company wants or needs to that's sort of the definition.

That's the whole reason that this whole thing exists and when the company went public and we were all buying shares at 17, the people on the pipe were buying at 15. Now, just a few months later, that share price is 47 or 48 and you would think that, given the timeline, it would kind of make sense to go and raise some money. But then you go and look at the little updates that came out earlier yesterday. That didn't get reported as much nowaday was that the saudi arabian public investment fund, as of the end of q3, now owns 62.7 percent of lucid motors over one billion shares out of the total available pool of 1.62 billion.

So this is a pretty unusual situation, because at the end of the day that gives them the public investment fund, a controlling vote and basically the ultimate decision maker in the whole in the whole company. And if you are the majority shareholder of a business in this sort of situation, would you prefer to maybe take on some debt for the company to take on some debt that you don't have to deal with and hopefully that that will be repaid in the next 10 years or so, or do you want to go and dilute yourself out of your shareholding just after the company's gone public now shareholding that you've been holding for some time and therefore you know you want to continue making more profit on well, it looks like we Have our answer now i know many investors will actually be very happy with the situation. People really hate dilution, people think it's the worst thing ever, but early stage, companies will often thrive because of their ability to access money on the open market that can facilitate their balance sheet to take them to way beyond 2022. It is money that has never got to be repaid, it is just free cash.

You can go and take and then invest in building those production lines. Invest in new factories, invest in having those shops that you don't cause you to run out of cash. So, for me this is going to be a burning question for lucid over the next few quarters. I apologize for the obvious burning pun, because 4.8 billion dollars in the bank is great for this stage in the company's life.

It is actually really good, but the moment that begins being spent at 600, 700 or 800 million dollars next quarter and then the quarter after and then maybe rising the quarter after that, a certain reality check might begin setting in on what taking a company to scale Production is actually going to take and how bumpy that ride is going to be. I currently do not hold a position and lucid. I held a large position because i bought most of my shares around that 17 mark, but i sold them when the share price hit 41 dollars. So as it stands, i am just a neutral observer and i do not have any plans to invest or open any position in lucid in the near future at this valuation, but i'm also a massive fan of the product and a massive fan of what they are Doing i really really hope that they do deliver and we get another great ev company that helps transform the world and help tesla dispatch the dinosaurs of the ice age into bankruptcy for not wanting to move with the times.

If you found this video useful, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later, you.