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Lucid (NASDAQ:LCID) the stock has drifted off its highs and now looks like a bargain. From a record price of $ 55.52 on November 16, LCID stock fell to $ 38.64 on December 27. It looks like the stock could have a good 2022 as well.
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Since the merger of its Special Purpose Acquisition Company (SPAC) closed in July, when the stock was in the mid-1920s, LCID stock has risen by at least $ 15, or about 60 %. But that doesn’t mean that electric vehicle (EV) inventory can’t continue to grow. This despite the fact that Lucid shares are below their peak price. As a result, expect to see LCID inventory increase this year.
Where are things at Lucid?
One of the reasons the stock price will rise is that analysts still expect earnings to increase next year. For example, they now estimate that revenues will reach $ 2.07 billion in 2022 based on a survey by In search of the alpha.
This is slightly lower than the company’s own projections in its slide presentation, as seen on page 65. This is where it projects $ 2.2 billion in sales for 2022. That may be. -be one of the reasons why the stock has gone down. Nonetheless, there is no doubt that its sales will likely increase next year.
In addition, the company expects its revenues to increase significantly by the end of 2023. Its forecast calls for 49,000 electric vehicles to be delivered, up from 20,000 in 2022. In addition, revenues are expected to reach $ 5.53 billion. dollars by the end of 2023.
Currently, LCID stock has a market cap of $ 62 billion. This is only 11.2 times its forecasted sales for 2023. This is an aggressive estimate, but it’s not completely unrealistic.
To get there, the company will have to spend a lot in capital expenditure (capex). On a conference call, CFO Sherry House said Lucid’s capital spending will increase next year. It will defer $ 350 million in future capital spending until 2022.
As a result, Lucid is fortunate to have enough cash on his balance sheet. The CFO said the $ 4.6 billion in cash he expects to have on his balance sheet will allow it until 2022.
However, just to make sure things are running smoothly, the company closed a $ 1.75 billion convertible senior note offering on December 10. This debt financing has a low nominal interest rate of 1.25%, so the interest charges will not be too high. Depending on how much he burns in that quarter, that will dramatically increase his cash flow.
Where things stand with LCID Stock
TipRanks reports that three analysts have an average price target of $ 42.75 per share. This represents upside potential of 10.6% for investors in LCID shares.
Keep in mind that the stock now has a market valuation of $ 62 billion. This puts it on a price / sales (P / S) multiple of 6.26 for the year 2024 based on the company’s projections.
This is a low multiple, but it will be higher after adjusting it for the current value of money. For example, assuming a 10% discount rate over 3 years, 2024 revenue adjusts 75.1% to $ 7.46 billion. This places it on an 8.3x forward P / S multiple.
It’s a little lower than You’re here (NASDAQ:TSLA), for example, which trades at 8.75 times revenue using estimates of In search of the alpha. That’s 5.4% more than Lucid’s current market valuation.
The bottom line is that LCID stock is worth between 5% and 10% more according to analysts and company forecasts.
As of the publication date, Mark R. Hake does not hold any position (direct or indirect) in any of the titles mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.
Mark Hake writes about personal finance on mrhake.medium.com aand run the Total Value of Return Guide that you can consult here.
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