Why Lucid Stock Crashed After Earnings
Key Points
Lucid missed badly on earnings last night.
Cash burn is Lucid's biggest problem.
The company hopes to reduce cash burn by $1.4 billion annually.
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Lucid Group (NASDAQ: LCID) stock tumbled 15% through 10:50 a.m. ET Wednesday after missing on earnings last night.
Heading into the report, analysts already weren't optimistic, predicting Lucid would lose $2.36 per share on $422.3 million in sales. Per-share losses actually totaled $2.78, however, and Lucid managed only $405.3 million in quarterly sales.
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Lucid Q2 earnings
The fact that these earnings were awful isn't lost on Lucid, which is promising an "operational reset" to fix its problems.
Despite producing 4,774 vehicles (24% more than in last year's Q2), Lucid managed to sell only 3,953 of them -- up 19%, but still up less than the increase in production. Revenue did grow a substantial 56% year over year, but that still wasn't enough to turn Lucid profitable. Cash burn accelerated 46%, with Lucid burning another $1.5 billion in the quarter.
That leaves Lucid with less than $733 million in the bank (not enough to last it another quarter), alongside more than $3 billion in long-term debt and "other long-term liabilities."
What's next for Lucid?
This cash burn rate is arguably the biggest problem facing the electric car company -- and it's the problem Lucid is working most actively to fix. Management says it's "identified $1.4 billion cash flow improvement opportunities in 2026 across operating expenses, capital expenditures, and working capital." Still, that would cover only one quarter of burn at the company's current burn rate -- and the year is four quarters long!
At the same time, Lucid is sinking more cash into building a second factory, "AMP-2" in Saudi Arabia, which will build even more of the EVs it's struggling to sell. Plans to build robotaxis for Uber (NYSE: UBER) might help create demand.
If that demand fails, though, look out below!
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.
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