May 7, 2024 6:58 PM - Gordon Thompson
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Lucid Group's Financial Struggles Amidst EV Sector Challenges
Lucid Group (NASDAQ: LCID), a player in the electric vehicle (EV) sector, has seen its share count increase dramatically from 1.65 billion to nearly 2.3 billion since the end of 2021, marking a 25.67% rise in outstanding shares year-over-year. This surge in share count is primarily attributed to the company's efforts to raise equity to fund its operations. Despite this, Lucid managed to produce 2,314 vehicles in the first quarter but delivered only 1,406 of these to customers. The company's financial health is under scrutiny, especially considering its negative free cash flow of $3.07 billion over the last twelve months, which represents about 90% of its cash and cash equivalents. This situation is reflected in Lucid's stock performance, with the price dropping approximately 15.13% to $2.59, showcasing a significant decline from its yearly high of $8.37. The fluctuation in stock price, alongside a substantial market capitalization of roughly $5.97 billion, underscores the challenges faced by Lucid in maintaining investor confidence amidst financial instability and share dilution.
Workhorse Group's Share Dilution and Financial Woes
Workhorse Group (NASDAQ: WKHS), another EV manufacturer, has also been diluting its shares through a $50 million share sale and the issuance of Green Senior secured convertible notes and additional shares via warrants. This strategy has enabled Workhorse to secure up to $139 million to support its operations. However, the company's involvement in securities litigation, resulting in a $35 million settlement, has led to a more than 30% increase in shares outstanding year over year. This financial maneuvering has not been well-received by the market, as evidenced by the stock price plummeting 81.46% over the past year. The significant drop in stock value and the increase in share count highlight the investor skepticism surrounding Workhorse's financial strategies and its impact on shareholder value.
Canoo's Precarious Financial Position
Canoo (NASDAQ: GOEV) finds itself in a precarious financial position, with a reported revenue of just $886,000 against operational losses of $302.62 million for the year. Despite a slight improvement from the previous year's larger loss, Canoo's financial stability is questionable, with only $6.39 million in cash and cash equivalents at the end of 2023. The company's substantial quarterly cash outflows and its efforts to stabilize its financial position, such as obtaining Foreign Trade Zone approval for its Oklahoma City facility, aim to improve profitability and reduce costs. However, these measures may not be sufficient to reverse the company's fortunes, as reflected in the broader concerns over its financial health and operational sustainability.
InvestorPlace Advises Selling EV Stocks Amidst Financial Instability
The financial challenges faced by Lucid Group, Workhorse Group, and Canoo have led InvestorPlace to advise selling shares of these EV stocks. The concerns over share dilution and financial instability are significant, suggesting that these companies could be headed for further trouble. The combination of increasing share counts, negative free cash flows, and declining stock prices paints a concerning picture for investors, indicating potential risks in the EV sector's more speculative segments.
Jan 16, 2024 4:18 PM - Samuel Abdelshahid
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The easiest way to calculate stock’s target price and why the target price is important.
A stock's target price, also known as its fair value, is an indication of what a share can cost based on the company’s forecasted financial statements. It is important to know a stock's fair value to find undervalued stocks with great growth potential. Let's consider how investment analysts calculat...
