Will Q4 earnings be electric for Lucid’s share price?

Lucid Group is expected to see improved revenue when it announces its fourth-quarter and full-year results this week, but the EV maker is still struggling to meet its production targets.

Lucid Group [LCID], which went public through a special purpose acquisition company in July 2021, is expected to report its Q4 and 2021 full-year numbers on 28 February.

The electric vehicle startup’s shares have been trading lower ahead of its upcoming results, but improved revenue and an increase in demand for its first vehicle, the Air sedan, could lift the stock higher.

Meanwhile, EV rival Rivian Automotive [RIVN], which made its stock market debut in November, is due to release its fourth-quarter results on 10 March.

It is still early days for Lucid, but Wall Street analysts expect the young company to post quarterly revenue of $36.74m, up significantly from $232,000 in the previous three months generated largely from a battery deal with the Formula E electric racing league.

The EV startup is still not profitable, with analysts forecasting that it will incur a $0.35 loss per share in Q4, a small uplift from the net loss of $0.43 generated in the September quarter.

However, CEO and CTO Peter Rawlinson is optimistic about long-term expansion. “Right now, we’re laser-focused as a company … in scaling what we’ve got,” he said. “Laser-focused on growing the scale towards 20,000 units next year and 50,000. But we're planning on 500,000 units by the end of the decade.”

EV shares have been under pressure

Electric vehicle stocks in general have been hit in 2022, with Lucid down 37% and rival Rivian falling 44.5% year-to-date at the close on 23 February. In comparison, the general market represented by the S&P 500 declined by 11.3% over the same period.

A global shortage of semiconductors, as well as the broader selloff in the tech sector due to fears over rising inflation and the prospect of multiple interest rate hikes, have hit EV shares.

Lucid and Rivian are among a handful of EV companies that came to market last year, and competition is heating up. Earlier this week, UK luxury car brand Lotus was reported to be pushing ahead with floating its new EV division through an IPO, as the firm readies to open a new production plant in China and targets 100,000 sales a year by 2030, according to Autocar magazine.

EV production targets are facing challenges

Lucid is banking on its the all-electric Air sedan, which was named MotorTrend’s car of the year, a prestigious award in the automotive industry. The company confirmed in November that it had secured 17,000 reservations and had an order book worth $1.3bn in the third quarter.

Lucid’s CFO Sherry House told analysts during the Q3 earnings call that the firm would begin recording revenue and details from vehicle sales in the fourth quarter.

Rawlinson, a former employee of Tesla [TSLA], confirmed last year that Lucid was still on track to deliver its 20,000 vehicle production target for 2022 but said that hurdles still remain, including “global disruption to supply chains and logistics”.

Meanwhile, competitor Rivian announced in December that it had generated $1m in revenue in the third quarter, meeting Wall Street analyst expectations. The company’s total reservations for its electric R1T pickup and R1S SUV increased to 71,000, up 28% compared with the most recent tally of 55,400 vehicles in November.

Rivian also posted that it had delivered 1,015 vehicles in 2021, which fell short of its 1,200 target due to supply chain issues as well as challenges ramping up production of the complex batteries that power the vehicles.

Lucid could miss its Q4 delivery target

Lucid shares crashed at the end of last week after Morgan Stanley issued a note suggesting the company could miss its Q4 delivery target. However, the investment bank thinks this is not a “big deal” as their analysts are more interested in hearing if the EV company can still stick to its 20,000 vehicle projection target for 2022.

According to six analysts polled by MarketBeat, Lucid Group has a consensus ‘hold’ rating and an average price target of $37, representing a 54.4% upside on the current price.