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Lucid Motors agrees to go public with $24B valuation
- zed88 6y agoCrazy, they barely have a product. This is Nikola 2.0.
- wcarron 6y agoLucid supplies the batteries for Formula E, and has for a few years, and I believe they recently resigned a contract to be the continued battery supplier for FE.
- zed88 6y agoNikola had contracts too, with the likes of GM.
- sokoloff 6y agoNikola’s contract with GM was to buy from GM.
- zed88 6y agoIt is still a contract of some repute with 11% stake. Do you think GM would sell to just any other startup with no history, if it wasn't for the hype??
- sokoloff 6y agoThe 11% was an additional sweetener given to GM to induce the partnership, not money GM was investing in Nikola. Would I be willing to take some shine from an EV company willing to give me an approximately $2B (at the time) stake in their company, pay me around $700M of my own costs, and buy vehicles from me at a cost-plus arrangement? Shall I use my pen or yours? https://www.marketwatch.com/story/nikola-stock-drops-as-gm-deal-is-now-nothing-to-write-home-about-11606754461 https://www.marketwatch.com/story/nikola-stock-drops-as-gm-d... Disclaimer: I’ve been quite short $NKLA for a while, quite profitably; I still am.
- deleted 6y ago[deleted]
- ramenmeal 6y agoThat doesn't sound like a $24B business.
- wcarron 6y agoMaybe not, but they are clearly doing much more than just that, as a cursory google search (and the article) tells us.
- onion2k 6y agoA company that is successfully making high-performance vehicle batteries only being valued at $24bn a decade before laws force the electrification of all the cars in the US and Europe seems really undervalued to me.
- xiphias2 6y agoIt's easier to create a luxury car, just how Tesla started, so at least they have a chance to come out with the $170k product that looks great. I can imagine people buying it just so that they can be different from Tesla. Nicola wanted to compete in high volume battery manufacturing, which can't be done without a long ramp-up time.
- zed88 6y agoIt's easy to create a prototype, the true test of any manufacturer is it's ability to roll these from the factories at scale. How many have they rolled yet?
- root_axis 6y agoI think this is a greatly underappreciated point. Tesla is the picture of success these days but people forget things were looking quite grim from a production perspective not too long ago, and even now, Tesla's rush to scale has earned their cars a reputation for factory defects. Success is not a given even with a compelling prototype.
- xiphias2 6y agoWhy would they need scale for a $170k car? I don’t think there are many buyers in that range. I don’t agree with the $24B valuation, I just think that they have at least a chance to sell real cars, unlike Nikola that had a bad strategy from the start.
- heavyset_go 6y agoMany Tesla fans are willing to turn a blind eye to defects that you typically wouldn't find in other luxury cars. I don't think Lucid Motors' fan base is that dedicated and forgiving.
- rsj_hn 6y agoIf they get a fan base, then by definition that base is going to be willing to turn a blind eye to some defects because they love some other aspect of the car. For Tesla, people loved the acceleration, handling, and interior styling, and so they were willing to forgive some of the build quality issues like gaps between the door and the body. The question is whether Lucid can deliver some unique experience that customers value, and if so, then they too will be forgiven for their own gaps.
- cepth 6y agoYou’d be paying for earnings several years out, for sure. But I think it’s hardly fair to compare to Nikola. Trevor Milton’s experience prior to starting Nikola was selling home security systems. Lucid’s leadership team features various Tesla, Audi, Ford, VW, etc. veterans. (See page 9: https://www.lucidmotors.com/files/lucid-investor-deck-february-2021.pdf https://www.lucidmotors.com/files/lucid-investor-deck-februa...) Lucid has finished building a factory that can produce roughly 30k cars per year, expandable to 400k. They’ve given rides in their launch vehicle to various auto journalists (https://youtu.be/gqSN2QNgO5k https://youtu.be/gqSN2QNgO5k). Their battery pack technology is a component of the Formula E drivetrain system (https://lucidmotors.com/media-room/atieva-powers-season-6-formula-e-spec-battery-pack-its-own-design/ https://lucidmotors.com/media-room/atieva-powers-season-6-fo...). This isn’t a “Nikola rolling a non functional truck down a hill” situation. They have a working product. The car could suck, the company could be overvalued. But I think hard to compare Nikola to Lucid. EDIT: I should also add for comparison, that at the time that Tesla IPOed in 2010, it was a 1.7B market cap company. Only ~2450 Roadsters (their only car at the time) would be sold in total. By November 29, 2010 Tesla had not yet sold 1400 cars (https://www.tesla.com/blog/race-champions-2010-motorsport-goes-electric-roc-buildup https://www.tesla.com/blog/race-champions-2010-motorsport-go...). Tesla's Fremont factory was opened in October 2010. In other words, when the company went public on June 29th, 2010 you would have been buying into a car company without a factory. The first Model S wasn't delivered until June 2012 (https://www.tesla.com/blog/tesla-motors-begin-customer-deliveries-model-s-june-22nd https://www.tesla.com/blog/tesla-motors-begin-customer-deliv...). Not to say that Lucid will or won't ever reach Tesla's heights, but assigning a 12B valuation to the company isn't loony. The SPAC price though is a different story. EDIT 2: There are some fun short videos of Lucid CEO Peter Rawlinson in the workshop from his Tesla days (https://www.youtube.com/watch?v=TrbOLHW8Pec https://www.youtube.com/watch?v=TrbOLHW8Pec, https://www.youtube.com/watch?v=8YxHp2ot61Y https://www.youtube.com/watch?v=8YxHp2ot61Y, https://www.youtube.com/watch?v=NGKqPYvtqXE https://www.youtube.com/watch?v=NGKqPYvtqXE). It's pretty awe inspiring to see where Tesla and the global EV industry as a whole was in 2011 vs today.
- nostromo 6y agoGoing public early in a company’s life used to be pretty normal. Only in recent decades has it become the norm to wait to go public until late in a company’s growth. I think going public early is better. VC’s and insiders have been capturing the lion’s share of early-stage growth returns. If companies go public earlier, more of that growth will be accessible to more investors.
- trimbo 6y agoA $24bn public valuation without a product for sale has to be off the charts as "going public early", though, right? Amazon raised, what, $50M or $100M in its IPO (and is what I'd consider an early one)?
- nostromo 6y agoPets.com went public the year after incorporating. The year after that they liquidated. (Granted... those were crazy times we probably don’t need to replicate.)
- trimbo 6y agoAt least I got this sock puppet dog out of it (Yes, for real, I have one)
- molyss 6y agoyou mean versus having a product that loses money ? Uber was losing between $1B and $5B a quarter when they IPO'd. In the last quarter of 2020, Uber lost close to $1B, and they're still valued at $108B, with no real long term plan for survivability. The way I see it, risks include legislative changes WRT driver status, bad press, self driving cars, a post pandemic world where more people own a car, and less people are in cities. And we're talking about a company that is primarily marketing and software, where the wind can change very quickly, and assets are mostly intangible and untransferable. car manufacturing is much harder to get into, so having a factory and an almost-complete design is already a huge milestone. Obviously, they'll need to sell _some_ cars, but they could even make money if they were to sell cars at a loss, through carbon credits.
- smilekzs 6y agoI live close to their corporate office and can easly spot test mules running around in almost no camouflage.
- impulser_ 6y agoComparing Lucid to Nikola is stupid. Lucid is nothing like Nikola. Yes, you could argue a 24b valuation is too expensive. But it basic supply and demand. You have a limited amount of shares of a very hyped up company in a very hyped up industry. Of course valuations are going to be expensive lol. Valuations only matter if you are selling today or tomorrow, not 10-20 years down the line.
- RyanShook 6y agoThe rise and acceptance of SPACs is the clearest sign we're in a bubble. I hope we don't look back at 2021 the way we do at 1999...
- _huayra_ 6y agoIn what way do SPACs indicate we're in a bubble to you? I don't disagree that we're in a bubble, but I don't understand much about SPACs and wonder what they indicate more precisely.
- RyanShook 6y agoIMO SPACs as an alternative to IPO are good for founders. I don't think they are good for markets because they indicate that investors don't currently care what their money is invested in, they just expect the manager to provide huge returns with very little due diligence. In this market it feels impossible to lose and SPACs have exploded because everyone is willing to write a blank check.
- mrorbitman 6y agoThe argument I usually hear is that SPACs = speculation. Most of the time investors are investing based on a rumor, and on top of that they are investing before they have access to the company's fundamentals/disclosures available after companies go public. Lots of speculative energy is often considered an indication of a market bubble.
- jchonphoenix 6y agoHow does a SPAC indicate a bubble? They're an alternative to an IPO with very clear pros and cons relative to an IPO itself. Or do you mean to say the number of companies going public indicates a bubble?
- rsj_hn 6y agoyeah, whether we are in a bubble or not is a question of valuation, not specific instruments.
- mieses 6y agoWhy does it have to look so boring and so much like a Tesla? Car design has become a soft gelatinous blob of marketing dictated homogeneity.
- rsj_hn 6y agoYeah, I miss the quirky cars of the past, especially 1940s-1960s. Even cars for the common man like the Fiat 1100 were more interesting (in terms of body design) than the luxury cars of today. https://myntransportblog.wordpress.com/page/9/?iframe=true&preview=true%2Fosd.xml https://myntransportblog.wordpress.com/page/9/?iframe=true&p...
- etcet 6y agoCars these days are shaped more by a wind tunnel than a designer. This is especially true for EVs where range is an important number.
- hn_throwaway_99 6y agoThe cars of today are much more constrained in terms of aerodynamics (fuel economy) and safety than the cars of yesteryear. There were cars in the 50s that had better aerodynamics backwards than forwards, and just watch one of those videos of an old car in a crash test collapse on itself before they figured out safety cages. There are essentially a very few optimal designs for safety and economy, so these days everything is essentially tweaks off that.
- csours 6y agoMaybe we can have fun designs like this if there are ever city cars with low speed focus and regulations. I can only imagine how much fuel those cars in your link would use at 70 mph (if they ever got up to that speed)
- rsj_hn 6y agoEngine technology has improved substantially, so I don't think you need to adopt 1960s horsepower in order to get 1960s quality body design. Aerodynamics takes a hit, so maybe that powerful engine wont hit 140mph, but it will have plenty of power and acceleration with a modern engine. And even for non-boxy cars, look at some of these streamline designs: https://1u4we0207ruc34o1s412c2ca-wpengine.netdna-ssl.com/wp-content/uploads/2019/06/2-dores.jpg https://1u4we0207ruc34o1s412c2ca-wpengine.netdna-ssl.com/wp-...
- laser 6y agoThis is dizzying. Over the summer Ford Motor Company had a valuation of <$24B (currently $46B), and yet in comparison to valuations across tech and especially the EV industry, doesn't seem far off what the market will accept for promises of tech-driven progress and growth. SPACs in theory seem like a great escape from the horrors of IPOs, but in the current manic climate it's all but inevitable that millions of retail investors are going to get fleeced when the SPACs collectively fall short of generating the necessary free cash-flow to justify their collective valuation. This could be years out, though, still, so hopefully there'll be some growing into valuations and a gradual come-off instead of a complete meltdown, but history shows we tend to make markets go boom and bust, so don't count on it.
- rsj_hn 6y agoYep. I'd say the traditional auto makers are way undervalued relative to Tesla. But what do I know? The only thing that I can see as an investment thesis is: 1. The whole auto industry is going to rapidly transition to electric only cars (not hybrid, but plug-in) 2. The established automakers are too slow, due to their size, bureaucracy, and relationships with component suppliers, unions, and dealers, to be able to efficiently make this switch 3. Therefore nimble electric vehicle startups are the smart bet. I disagree with this thesis -- for example it will take several decades just to improve our electricity grid to handle a real rush of PEV, and those electricity utilities are a lot slower and more bureacratic than the mainstream automakers. And that's just one of many arguments against this thesis. Moreover there isn't enough data to suggest that people will accept PEV - you are talking about minuscule volumes so far and are betting everything on extrapolating exponential growth from a small base. But at least it's not a crazy thesis. A case can be made to a rational person to justify these valuations, even if most rational people are going to be skeptical of this case.
- Swizec 6y ago> 2. The established automakers are too slow, due to their size, bureaucracy, and relationships with component suppliers, unions, and dealers, to be able to efficiently make this switch Literally every major car maker has an EV on the market or is launching one this year. The problem isn’t the car makers, it’s that the market is still early. Give it 10 years. There’s lots of kinks left to figure out that we take for granted in modern cars. Most notably cold weather performance, weight, resell value, range, and longevity. Can a modern EV be expected to work fine in 20 years? An ICE can. And no matter what everyone says, EVs are still kind of impractical. I rented a Tesla for a weekend (in SF) and it was terrible. We spent the whole time chasing chargers and ultimately almost destroyed the car according to the dashboard warnings. Finally found an available charger in the city with 3% battery left.
- Negitivefrags 6y agoSo correct me if I am wrong in my understanding here but... CCIV has a NAV of $10. The SPAC trades at $55 now (though down after this news). This means that whatever price Lucid just agreed to for their valuation, the SPAC holders effectively pay 5.5x that amount for the shares they are getting in Lucid. So that means that the SPAC investors just effectively invested in Lucid at a 132B valuation? Is that right?
- eigenvalue 6y agoNo, the shares of CCIV were valued by Lucid at their approximate market price, not the NAV.
- zamfi 6y agoWhy would this be the case? The money they're getting is coming from CCIV's assets (which don't change based on the market price) and the new PIPE.
- mrorbitman 6y agoNo I don't think so. A ~$37 price tag for CCIV would translate to ~$60B Lucid valuation. I'll buy in if it gets close to that tomorrow (I expect it will) https://www.youtube.com/watch?v=NR76ObYeGkw https://www.youtube.com/watch?v=NR76ObYeGkw
- Negitivefrags 6y agoI think maybe I got the NAV wrong due to this PIPE thing that they are getting extra capital from. But with your math then the people buying at $55 bought in at a 90b valuation? That's still a lot higher than the 24B in this news headline.
- Lazare 6y agoIt's absurdly complicated, but....as I understand it, yes. 1. CCIV sold shared at $10 each, raising a bit over $2b 2. Those shares were trading around $55. This price represents a "pre-pop"; the price spiked on rumours CCIV would be merging with Lucid. There's still only $2b of money in the pot though. 3. CCIV is agreeing to value Lucid at $24b. The $2b of cash will buy around 8% of the company. 4. A seperate (PIPE) investment is adding another $2b of cash to the pot, but what terms the PIPE investment is getting and what valuation they're using is unknown. 5. So yes, if you bought a share in CCIV for $55 (or held onto it rather than selling it for $55), and are opting not to redeem, you're saying that you think $10 worth of Lucid at a $24b value is going to be worth over $55 at their "true" valuation which would be....yeah, at least $132b. See also: https://www.bloomberg.com/opinion/articles/2021-02-19/michael-klein-s-cciv-hits-spac-jackpot-with-reddit-adored-lucid https://www.bloomberg.com/opinion/articles/2021-02-19/michae... That was written a few days ago before the deal had been made when there was speculation of a $12b valuation, and it already seemed a bit wild So...yes, either I'm missing something basic, or a $55 share value now is basically a gamble on Lucid having a market cap of well over $100b once it's trading. (Talk about first day pops; with SPACs you don't even have to wait until a deal has been signed to get a several hundred percent pop....)
- villgax 6y agoFor what exactly? The future sales?
- iamgopal 6y agoWhy “agrees” and not “decides” ?
- rasz 6y agoHow gracious of them, a 13 year old "startup" with no product, revenue or customers.