Raging BUY at $2.26?

[Blue Lectroid]

Last week LCID was north of $3.50. This morning it’s $2.26. Full disclosure, I’ve been putting together a decent sized position since last November with an average price per share of $2.47. I bought more last week at $3.17 and bought a LOT MORE yesterday at $2.25.

The long term thesis for LCID is better (IMHO) than it was last week. Earnings results were better than expected, forward looking revenue / sales projections are very positive and the Company has started the necessary transition from Founder-run to long term, professionally managed. I know, I know, everyone points to Jobs at Apple and says “Peter leaving is the end, SELL!”

Steve Jobs was a Black Swan. Just as Elon is. MOST companies succeed by moving BEYOND their CEO’s, not by clinging to them forever (or in Jobs’ case, inviting them back).

Peter is an awesome, once in a generation engineer, inspiring human being and I deeply respect him. That said, many of the things folks do NOT like about Lucid are “classic issues” with Founder-run companies — diffuse message strategy, missing production deadlines, poor customer communication, slow (or lack of) progress towards profitability, hit or miss product quality. The very skills that allow for the exceptionally engineered products Lucid has created are at odds with many of the more mundane daily blocking and tackling of running / growing a quality public company.

Please remember that Peter recently boasted about personally engineering the sill plate in the rear of Gravity’s trunk to avoid damaging the trunk’s weather stripping. He also took over responsibility for software development last Fall. Those are lovable but also are typical acts of Founder CEO’s. They built the place, so it’s impossible to let go.

The trunk weather stripping idea MIGHT sell two extra vehicles (if anyone even notices it as a feature). Putting together a better communication strategy? Solving nagging quality product issues? Delivering a great ADAS? Hitting production deadlines? THOSE things sell thousands of vehicles. There is a very deep, passionate engineering bench and ethos at Lucid that I believe will continue to shine. Peter deliberately built a great team — he never wanted Lucid to become a Cult of Personality.

I wish Peter nothing but the best. I also am far more bullish on LCID today than I was Tuesday morning…

 

[hmp10]

I wish Peter nothing but the best. I also am far more bullish on LCID today than I was Tuesday morning…

You make a strong case. I do worry a bit, however. Keeping the spark of top-tier engineering focus alive in the day-to-day press of managing costs and other business dimensions is a very difficult act to pull off.

Every one of the Detroit Big Three lost its way when finance people moved into the corner offices. Cadillac, for example, went from being one of the premiere technology innovators in the industry to being the running joke that produced the Cimarron. Pontiac, once the sporting division of GM, became known as the plastic-body-cladding division. Chrysler became a vinyl and velour emporium with risible product quality that still plagues it today. The Ford Mustang went from prancing pony to wallowing pig and excrescences such as the 4-banger turbocharged Thunderbird raised their ugly heads.

GE, at first supercharged when Jack Welch took the stage with innovative thinking about organization dynamics and product research-and-development, evolved in his later tenure into a finance engine and cost-cutting house. The executives he groomed near the end of his tenure as potential successors earned their place on the roster largely by their effectiveness at cost cutting -- and all went on to flop. Jeff Immelt, who won the race to take over GE, instituted cost-cutting at GE Medical that looked great for a few years but spawned quality issues that eventually opened the door for Siemens to replace it as the preferred imaging equipment supplier to the global medical community. And we all know where GE is now -- what there is left of it, anyway. Bob Nardelli, who slashed and burned his way through GE Power Systems but lost the CEO race to Immelt, moved on to Home Depot where his cost-cutting efforts cost them market share and him his job in fairly short order. Jim McNerney, another CEO finalist and management efficiency guru went on to lackluster tenures at 3M and Boeing. And Dave Calhoun -- who might have won the CEO race at GE had he stayed until the end -- is now infamous as the cost-slasher and stock price pumper who brought once-mighty Boeing to its knees.

In a world where investors want engineering-intensive and heavy-industry concerns such as automakers to dance, pop, and sparkle in the marketplace like digital tech firms, keeping engineering at the forefront is all too often a doomed effort.

So . . . I worry that Rawlinson's departure from Lucid barely two products in, while perhaps eventually becoming advisable, might have come too soon.

 

[Blue Lectroid]

You make a strong case. I do worry a bit, however. Keeping the spark of top-tier engineering focus alive in the day-to-day press of managing costs and other business dimensions is a very difficult act to pull off.

Every one of the Detroit Big Three lost its way when finance people moved into the corner offices. Cadillac, for example, went from being one of the premiere technology innovators in the industry to being the running joke that produced the Cimarron. Pontiac, once the sporting division of GM, became known as the plastic-body-cladding division. Chrysler became a vinyl and velour emporium with risible product quality that still plagues it today. The Ford Mustang went from prancing pony to wallowing pig and excrescences such as the 4-banger turbocharged Thunderbird raised their ugly heads.

GE, at first supercharged when Jack Welch took the stage with innovative thinking about organization dynamics and product research-and-development, evolved in his later tenure into a finance engine and cost-cutting house. The executives he groomed near the end of his tenure as potential successors earned their place on the roster largely by their effectiveness at cost cutting -- and all went on to flop. Jeff Immelt, who won the race to take over GE, instituted cost-cutting at GE Medical that looked great for a few years but spawned quality issues that eventually opened the door for Siemens to replace it as the preferred imaging equipment supplier to the global medical community. And we all know where GE is now -- what there is left of it, anyway. Bob Nardelli, who slashed and burned his way through GE Power Systems but lost the CEO race to Immelt, moved on to Home Depot where his cost-cutting efforts cost them market share and him his job in fairly short order. Jim McNerney, another CEO finalist and management efficiency guru went on to lackluster tenures at 3M and Boeing. And Dave Calhoun -- who might have won the CEO race at GE had he stayed until the end -- is now infamous as the cost-slasher and stock price pumper who brought once-mighty Boeing to its knees.

In a world where investors want engineering-intensive and heavy-industry concerns such as automakers to dance, pop, and sparkle in the marketplace like digital tech firms, keeping engineering at the forefront is all too often a doomed effort.

So . . . I worry that Rawlinson's departure from Lucid barely two products in, while perhaps eventually becoming advisable, might have come too soon.

Really appreciate your thoughtful words. I share your concerns. The fact that the Saudis are the largest shareholders, however, gives me hope that they will make a choice for a CEO with a much longer term focus and holistic thinking than publicly traded American companies are typically capable of. We’ll see! I have certainly put my money where my mouth is!! The next couple of months will be telling…

 

[hmp10]

I have certainly put my money where my mouth is!! The next couple of months will be telling…

So have I. Unfortunately for me, you have been savvier in timing your purchases, as my mouth is at a considerably higher cost average than yours is.

 

[Blue Lectroid]

So have I. Unfortunately for me, you have been savvier in timing your purchases, as my mouth is at a considerably higher cost average than yours is.

Hopefully, in the long term your average cost will not matter!

 

[DeaneG]

We could have a highest-average-cost competition. I'm at about $7.50.

 

[Blue Lectroid]

We could have a highest-average-cost competition. I'm at about $7.50.

Ouch. Well, if you loved it at $7.50…

 

[DeaneG]

Ouch. Well, if you loved it at $7.50…

I thought it had likely hit bottom!

 

[WeighingGravity]

Please remember that Peter recently boasted about personally engineering the sill plate in the rear of Gravity’s trunk to avoid damaging the trunk’s weather stripping. He also took over responsibility for software development last Fall. Those are lovable but also are typical acts of Founder CEO’s. They built the place, so it’s impossible to let go.

The trunk weather stripping idea MIGHT sell two extra vehicles (if anyone even notices it as a feature). Putting together a better communication strategy? Solving nagging quality product issues? Delivering a great ADAS? Hitting production deadlines? THOSE things sell thousands of vehicles.

^ This, lots and lots of this.

Lucid clearly has the best tech and the best packaging in the industry. But a tech advantage is only worth something if you're using it to sell differentiated products at a premium, or sell more products than you would have otherwise. It's worth nothing if all you have are videos about how it's better but no product on the market. It's felt like Lucid is so busy tinkering to make Gravity perfect that they're not selling cars in the meantime. To use the old phrase, perfect is often the enemy of good enough.

And in the meantime, the tech advantage that they have is only good for so long. You do have to keep innovating, of course, but you have to actually use the advantage you have to win. Otherwise, it's just like a beautiful ice cream cone sitting behind glass, melting in the sun, with nobody to eat it.

Just one more thing that I didn't like about that weatherstripping segment in the video: Shouldn't a great CEO have a team of people that can engineer a sill plate that doesn't damage the weatherstripping? I haven't seen any other evidence that suggests Peter is an egomaniac; to the contrary he seems like a really likeable, affable person. But that anecdote was a bit of a red flag IMO. Even if it became necessary, which happens, the greatest leaders would coach people through that and then let them take the credit. And that wouldn't necessitate them to design the next sill plate.

 

[hmp10]

^ This, lots and lots of this.

Lucid clearly has the best tech and the best packaging in the industry. But a tech advantage is only worth something if you're using it to sell differentiated products at a premium, or sell more products than you would have otherwise. It's worth nothing if all you have are videos about how it's better but no product on the market. It's felt like Lucid is so busy tinkering to make Gravity perfect that they're not selling cars in the meantime. To use the old phrase, perfect is often the enemy of good enough.

And in the meantime, the tech advantage that they have is only good for so long. You do have to keep innovating, of course, but you have to actually use the advantage you have to win. Otherwise, it's just like a beautiful ice cream cone sitting behind glass, melting in the sun, with nobody to eat it.

Just one more thing that I didn't like about that weatherstripping segment in the video: Shouldn't a great CEO have a team of people that can engineer a sill plate that doesn't damage the weatherstripping? I haven't seen any other evidence that suggests Peter is an egomaniac; to the contrary he seems like a really likeable, affable person. But that anecdote was a bit of a red flag IMO. Even if it became necessary, which happens, the greatest leaders would coach people through that and then let them take the credit. And that wouldn't necessitate them to design the next sill plate.

You're making an awful lot out of a sill plate, but I do get your point. Can't say I disagree as much as I'd like to.

Part of my fear surrounding Rawlinson's departure is how many car brands I've seen go backward in terms of driving dynamics as the cars got heavier, glitzier, more feature-laden, and more digital, with BMW being perhaps the best example.

More than his engineering chops, it was Rawlinson's pure love of driving that came through in his cars and pulled most at the strings of my heart. He, more than any other automotive engineer, kept the old days of Jaguar and Lotus alive in modern cars (and in EVs, no less) . . . no coincidence since he held senior engineering positions in both those companies.

 

[RMSko]

I didn't get in at $2.26, but I did start my position today and bought a pretty large chunk at $2.32.

 

[Blue Lectroid]

I didn't get in at $2.26, but I did start my position today and bought a pretty large chunk at $2.32.

Your average price is still better than mine!!!

 

[tonybot]

I trimmed my positions after hours on the earning day and started a smaller position compared to those previous holdings at $2.25 yesterday. Do not discount that they needed to raise more money, possibly around this year's end, and that means dilution. We saw it when dilution happened later last year, and that is a bump ahead of us. I hope the stock is sufficiently higher by then to dull the impact.

 

[Blue Lectroid]

I trimmed my positions after hours on the earning day and started a smaller position compared to those previous holdings at $2.25 yesterday. Do not discount that they needed to raise more money, possibly around this year's end, and that means dilution. We saw it when dilution happened later last year, and that is a bump ahead of us. I hope the stock is sufficiently higher by then to dull the impact.

Nice timing!!! I wish I had been smart enough to do the same, but I've always been a "buy at the right price" and hold for the long term guy...

 

[RMSko]

I trimmed my positions after hours on the earning day and started a smaller position compared to those previous holdings at $2.25 yesterday. Do not discount that they needed to raise more money, possibly around this year's end, and that means dilution. We saw it when dilution happened later last year, and that is a bump ahead of us. I hope the stock is sufficiently higher by then to dull the impact.

Agreed re dilution. They prob have enough money for 18 months which means they will likely want to lock up more within 6-12 months. Since I just got in, I’ll consider selling before then

 

[MacBain00]

A few all over the place thoughts:

• Even if Lucid does well, current market is not super stable and there is a strong chance we see lower prices across the board which would make any investment just feel bad. Just have to hold through the pain if you believe.
• With current administration, there is a trend towards a negative perspective of America. Lucid is an American brand. It doesn't have the same brand tarnish that Tesla has now, but the EU (probably next biggest EV market) buyers could be turned away simply because it's an American brand. We should see a shift in buying sentiment out of the EU in general towards more home-grown products as long as there is an alternative available. Lucid could end up catching strays just because.
• Peter seems to have a strong Engineering background, but that doesn't necessarily mean it translates into running a company across the board. Lots of times you get stuck in the weeds or have software development ADD which can hinder progress (i've worked for companies where founders hold on too long). From a complete outsider's perspective, it feels like Lucid suffers from the later. I would really be interested to know how much of their dev stack translates from the Air to Gravity. Have they created a situation where making a change requires updates in multiple locations to create uniformity which slows release cycles dramatically? I saw a post the other day on the forums that the EU just got 2.6.5 which is a full year after their last EU software release. Is this normal?

I think buying in at this price is fine, but if you really look at their fundamentals and set all your emotions aside, is this a long-term investment hold, a potentially lottery ticket, or a company you wished would be successful? The markets are littered with the corpses of amazing companies with the best platforms that simply couldn't put it together.

 

[MJAir23TheGoat]

My last purchase was buying 7K shares total in 11/24 At $2 per…… bought it twice in November at that level.
I’ve bought and sold the stock probably 10-12 times since 2020 SPAC when it was moving up and down in the $50 range. Most of it has been taking profit ( paid for most of my GT with profit)……
currently I’m
averaged down from my previous buys in $4-range. Have about 12K total shares now with cost of $3.14 ( holding) I’m in for the long haul and think they will be fine long term. Great product and they will continue to be innovative although I think they will miss Pete.
My neighbor however was LCID long term still holding original purchase ….. 7K shares at $30

The expectations have been set to sell 20 K cars in 2025. This will be in an interesting year.

I’m not adding anymore Shares currently.
I’d venture to guess there is a 50-50 chance it goes sub two dollars in next month.

The tarnished brand thing is being overplayed media hype. Do you really think people won’t buy lucid because who the fund is if they start to become more mainstream? If you have a good product, they’re all always be buyers This is a news talking cycle with Tesla. There were reports yesterday that people are vandalizing Porsche and VW‘s. It’s a temporary thing and will be forgotten in a matter of months.

 

[Gravitas]

We could have a highest-average-cost competition. I'm at about $7.50.

I am at $5.51.
Bought a decent amount this afternoon at $2.26.
My first purchase was at $31.25 on Feb-18-2021!

 

[thyname]

Bought 1,000 shares yesterday at $2.26. First time ever buying this stock, simply because I like my brand new Touring. Basically emotional reason. I can afford to lose that $2,260 in full. I will not average down, but may average up (if it happens)

 

[dwfallin]

Think I’m around the $3.50 mark and I will continue to bring that down at current prices! Milt concern with his departure was if it was forced, would some of the other internal leaders take issue with it. Big fan of him, big fan of the company - I think it’s in a hood spot with the tech and the manufacturing capabilities they have to either punch out impressive vehicles and/or provide the tech to other companies. In for the long run, sub $3 is a bargain