$LCID - Lucid Motors: Position Update

Hello everyone, I have been following $LCID for a while now and wanted to share some updates about their business since the last time I posted (In July). This analysis will contain recent news and SEC filings that came out since my last analysis and help you to understand what it all means. My previous analyses have covered the terms of their merger, their revenue estimates, their PIPE investors, the risks to investing, the potential catalysts, and much more. If you want more background context, refer back to my previous analyses of $LCID – Lucid Motors (formerly $CCIV) which can be found here and here. Recent SEC Filings: Revised Compensation Package for the following: Peter Rawlinson’s (CEO) salary is $575k, and his bonus can be up to 100% of his base salary. Sherry House’s (CFO) salary is $500k, and her bonus can be up to 75% of her base salary. Eric Bach’s (Senior VP & Chief Engineer) salary is $450K, and his bonus can be up to 75% of his base salary. Michael Smuts’ (VP of Finance) salary is $360K, and his bonus can be up to 50% of his base salary. These salaries are not massive, and I do believe that these people deserve this increase in salaries as they have been at Lucid for a long time, and have helped to build this company to where it is today. Employee Benefit Plan: Lucid Motors has introduced and passed a new (Lucid Group 2021) stock incentive plan for their employees. This plan authorizes the offering of 23.79M to their employees to but at a maximum cost basis of $22.71 (representing a discount of 7% off of current market prices). Furthermore, they have amended previous (Atieva) stock incentive plans that offer up another 66.55M shares at a weighted average share price of $1.08/share (representing a weighted average discount of 96%) I think that it is likely that all of these shares (both new plan and old plans) will be repurchased by employees, which can have a total dilutionary effect of 5.55% This plan can help Lucid to retain their current talent and be a top competitor to bring in new talent. Being able to have the top talent is a factor that will help Lucid in the long run and help them to gain an advantage over their competitors. This is why I am alright with them offering such a large number of shares. Production: On September 28th, 2021, Lucid filed an 8-K form that stated they started the production of their flagship vehicle the” Lucid Air” at their AMP-1 factory in Arizona. Furthermore, they stated that customer deliveries will begin in late October, with over 13,000 reservations that need to be tended to. I think that this is the first of many positive press releases as Lucid attempts to please their shareholders in the coming months/years. Recent News: EPA Report: On September 15th 2021, the EPA (Environmental Protection Agency) concluded their testing of the Lucid Air (Dream Edition). This report stated that the EPA has rated the Lucid Air (Dream Edition) has a range of 520 miles, making it the longest-range electric vehicle ever rated by the EPA. This is huge news for Lucid as it solidifies their place in the EV market at such an early stage in their business. This rating is a milestone for EV innovation and shows that Lucid is already capable of creating industry-leading technology in-house. If you would like to read more about this, I would recommend this article by Motor trend. Lucid Gravity Progress: Lucid has recently announced that their Project Gravity is on track to release in 2023. The Lucid Gravity is going to be their second production vehicle and is going to be a crossover with a range of 400+ miles. The fact that they have stated that they are on track for the production of this vehicle is good news, considering the fact that they were a couple months behind on the release of their Lucid Air. PIPE Investors: As stated in my previous analysis (here), one of the biggest risks to investing into $CCIV before their merger was the liquidation of PIPE investors. Well, this day came on September 1st 2021, in which we saw Lucid open 20% lower than they closed on August 31st 2021. This was a huge sell off as I mentioned in my previous article. In my article I also mentioned that it would be a good buying opportunity for long term investors, which it turned out to be. Since then, Lucid has returned 50%. However, now with the PIPE investors out of the way, investors can look forward to the future of Lucid, without this idea floating around in their mind. This also makes Lucid a less risky investment than it previously would have been. Investment Valuation: In my previous analysis (found here), I found Lucid’s fair value to be $29.86/share, which implies an upside of 23.33%. This fair value was estimated based off of Lucid’s future revenue projections because that is all that I can use to estimate their future cash flows as they do not yet generate revenues. This is still my best estimate; however, they have fallen behind on their progress projections, which may cause this valuation to overestimate their future revenues.

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$LCID - Lucid Motors: Position Update

bullish

Hello everyone,

I have been following $LCID for a while now and wanted to share some updates about their business since the last time I posted (In July). This analysis will contain recent news and SEC filings that came out since my last analysis and help you to understand what it all means.

My previous analyses have covered the terms of their merger, their revenue estimates, their PIPE investors, the risks to investing, the potential catalysts, and much more. If you want more background context, refer back to my previous analyses of $LCID – Lucid Motors (formerly $CCIV) which can be found here and here.

Recent SEC Filings:

  • Revised Compensation Package for the following:
    • Peter Rawlinson’s (CEO) salary is $575k, and his bonus can be up to 100% of his base salary.
    • Sherry House’s (CFO) salary is $500k, and her bonus can be up to 75% of her base salary.
    • Eric Bach’s (Senior VP & Chief Engineer) salary is $450K, and his bonus can be up to 75% of his base salary.
    • Michael Smuts’ (VP of Finance) salary is $360K, and his bonus can be up to 50% of his base salary.
      • These salaries are not massive, and I do believe that these people deserve this increase in salaries as they have been at Lucid for a long time, and have helped to build this company to where it is today.
    • Employee Benefit Plan:
      • Lucid Motors has introduced and passed a new (Lucid Group 2021) stock incentive plan for their employees.
        • This plan authorizes the offering of 23.79M to their employees to but at a maximum cost basis of $22.71 (representing a discount of 7% off of current market prices).
      • Furthermore, they have amended previous (Atieva) stock incentive plans that offer up another 66.55M shares at a weighted average share price of $1.08/share (representing a weighted average discount of 96%)
        • I think that it is likely that all of these shares (both new plan and old plans) will be repurchased by employees, which can have a total dilutionary effect of 5.55%
      • This plan can help Lucid to retain their current talent and be a top competitor to bring in new talent. Being able to have the top talent is a factor that will help Lucid in the long run and help them to gain an advantage over their competitors. This is why I am alright with them offering such a large number of shares.
    • Production:
      • On September 28th, 2021, Lucid filed an 8-K form that stated they started the production of their flagship vehicle the” Lucid Air” at their AMP-1 factory in Arizona.
      • Furthermore, they stated that customer deliveries will begin in late October, with over 13,000 reservations that need to be tended to.
      • I think that this is the first of many positive press releases as Lucid attempts to please their shareholders in the coming months/years.

Recent News:

EPA Report:

On September 15th 2021, the EPA (Environmental Protection Agency) concluded their testing of the Lucid Air (Dream Edition). This report stated that the EPA has rated the Lucid Air (Dream Edition) has a range of 520 miles, making it the longest-range electric vehicle ever rated by the EPA. This is huge news for Lucid as it solidifies their place in the EV market at such an early stage in their business.

This rating is a milestone for EV innovation and shows that Lucid is already capable of creating industry-leading technology in-house.

If you would like to read more about this, I would recommend this article by Motor trend.

Lucid Gravity Progress:

Lucid has recently announced that their Project Gravity is on track to release in 2023. The Lucid Gravity is going to be their second production vehicle and is going to be a crossover with a range of 400+ miles. The fact that they have stated that they are on track for the production of this vehicle is good news, considering the fact that they were a couple months behind on the release of their Lucid Air.

PIPE Investors:

As stated in my previous analysis (here), one of the biggest risks to investing into $CCIV before their merger was the liquidation of PIPE investors. Well, this day came on September 1st 2021, in which we saw Lucid open 20% lower than they closed on August 31st 2021. This was a huge sell off as I mentioned in my previous article.

In my article I also mentioned that it would be a good buying opportunity for long term investors, which it turned out to be. Since then, Lucid has returned 50%.

However, now with the PIPE investors out of the way, investors can look forward to the future of Lucid, without this idea floating around in their mind. This also makes Lucid a less risky investment than it previously would have been.

Investment Valuation:

In my previous analysis (found here), I found Lucid’s fair value to be $29.86/share, which implies an upside of 23.33%. This fair value was estimated based off of Lucid’s future revenue projections because that is all that I can use to estimate their future cash flows as they do not yet generate revenues.

This is still my best estimate; however, they have fallen behind on their progress projections, which may cause this valuation to overestimate their future revenues.

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4 min

30.00

Target Price

8/ 10

Confidence

6-12 Months

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