The one-time high-flying EV stock, Lucid Group, is slated to report its earnings for the second quarter of 2022 today. As investors tune in to gauge the company’s performance in relation to its stated goal of delivering between 12,000 and 14,000 EVs in the entire 2022, there is a death of heightened fear in the market currently, at least when measured on the basis of the implied volatility (IV) skew between puts and calls. As per consensus estimates, Lucid Group is expected to report $157.12 million in revenue for Q2 2022. (All figures are in millions of dollars) Moreover, analysts also expect the company to report -$0.31 in non-GAAP EPS. (All figures are in dollars) Bear in mind that Lucid Group had delivered 125 units of its Air electric sedan in Q4 2021 and 360 units in Q1 2022, thereby bringing its total reported deliveries to 485 units. Nonetheless, the company expects to deliver between 12,000 and 14,000 units for the entire calendar year. This equates to an average monthly production run rate of between 1,333 and 1,555 units. Investors are sure to scrutinize Lucid Group’s production-related guidance in order to assess whether the company can meet its own watered-down annual target. Additionally, reports have emerged in recent days that suggest Lucid Group is already working on a Tesla Model 3 competitor that is expected to launch in 2025-26 following the debut of the much-anticipated Lucid Gravity SUV in H2 2023. Back in February, Lucid Group leased a plot of land from Emaar EC – a Saudi joint-stock public company – in the King Abdullah Economic City’s (KAEC) Industrial Valley. The 25-year lease agreement came at the cost of $30.26 million. The EV company is establishing a manufacturing facility with a capacity of 155,000 units per annum in the KAEC. Saudi Arabia is providing incentives of around $3.2 billion to Lucid Group over a 15-year period to establish this facility. In late April, Lucid Group secured a massive order of up to 100,000 EVs from the government of Saudi Arabia. The order relates to the recently launched Air electric vehicle as well as future models that the company intends to launch in the next few years. Initial deliveries under this order are slated to commence in Q2 2023, with the delivery cadence expected to ramp up to between 4,000 and 7,000 vehicles annually starting in 2025. This brings us to the crux of the matter. The 30-day IV skew between 25-delta puts and calls is currently hovering at its latest 20-day average. Bear in mind that 25-delta options have a roughly equal probability of expiring in the money. The IV skew is a relatively robust measure of demand for puts vs. calls. As demand for puts increases, their implied volatility also generally increases. As is evident from the snippet above, there is no heightened fear among investors in relation to today’s earnings by Lucid Group. This bodes well for the stock’s near-term prospects. Nonetheless, the metric remains in an overall bearish territory, which is understandable given the stock’s 50 percent-plus losses so far this year. We will update this post with actual earnings once they are released in the after-hours session of the market today.
Update: Lucid Group Announces Q2 2022 Earnings
Lucid Group earned $97.3 million in revenue during the second quarter of 2022 against expectations of $157.12 million. The company delivered 679 units of the Air EV during the quarter, corresponding to a sequential increase of 89 percent. During H1 2022, the company delivered 1,405 vehicles. Reservations of the Air EV currently stand at 37,000 units. Lucid Group retained $4.6 billion in cash and cash equivalents at the end of Q2. Crucially, Lucid Group has revised its 2022 production target to between 6,000 and 7,000 vehicles. Previously, the company had guided to a production cadence of between 12,000 and 14,000 units. Finally, the company has disclosed -$0.33 in adjusted EPS, slightly worse than expectations of -$0.31. Lucid Group shares are currently down 12 percent in after-hours trading.
