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Lucid CFO on Profitability Plans and Reverse Stock Split
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Good morning, CFOs. Lucid’s CFO talks about the EV maker’s reverse stock split; Germany’s financial watchdog said Gerresheimer violated accounting regulations; and Kodiak is set to go public.
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PHOTO: KENT NISHIMURA/BLOOMBERG NEWS
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Electric-vehicle maker Lucid Group is navigating higher tariff costs, the elimination of federal tax credits and steep competition from peers. I talked to Chief Financial Officer Taoufiq Boussaid, who joined Lucid in February from steel-wire maker N.V. Bekaert, about the company’s financial situation. Edited excerpts follow.
Lucid continues to book sizable net losses, most recently $539 million in the latest quarter. What’s your plan for profitability?
Boussaid: Profitability is a question of scale. Volume for us is really the key lever to reach profitability. We have our internal roadmap, we know the milestones and we're executing against those milestones. We have some roadblocks that we’re facing from time to time. This year has been a perfect storm, but scale is really the key point. We have been prudent in building capacity. This is most of the drag when it comes to profitability. Once you have the scale, you also need to continue working on all the other levers to make your business profitable. That's the cost. That's optimizing the bill of materials. That's making sure that the pricing is at the right place. We’re quite good at managing all the different components—the P&L, the pricing and the bill of materials, especially for our midsize platform. We are very happy with how things are
trending so far. The game changer will be the volume that we're expecting in the next coming years.
Lucid recently completed a 1-for-10 reverse stock split. The stock is down 77% from five years ago. A reverse stock split generally helps boost a stock’s share price. What was the impetus for that move?
Boussaid: When it comes to the perception of a company positioning its product in a premium market, with a stock valuation at $2.50, it just doesn't work. But that's more from the subjective standpoint. From the objective standpoint, as part of the work that we're doing to get to the right rating of the company, one important technical criteria is the entry point that some long institutionals are using for the first filter for the stock they're looking at. And that's the $5 threshold. Below that, it gives the impression it's technically very difficult for them to enter and exit. When the stock price is so low, it becomes very cumbersome to manage big volumes of shares. We have a strategy where we want to be able to become more relevant with these long institutions. We already have a good representation of all the major institutionals. We want them to
increase their participation in the company, and we're making things easier for them with the reverse stock split.
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📆 Earnings
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Accenture
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CarMax
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Costco Wholesale
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Jabil
📈 Economic Indicators
The Bureau of Economic Analysis releases its third and final estimate of second-quarter gross-domestic-product growth.
The Census Bureau releases the durable goods report for August.
The National Association of Realtors reports existing-home sales for August.
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Where senior finance leaders confront today’s expanding remit. Connect on capital, regulation, technology, and talent — and lead with clarity.
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What Else Matters to CFOs
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Vials produced by Gerresheimer. Shares in the company slumped after Germany’s financial watchdog said the company had violated accounting regulations. PHOTO: PATRICK WINGROVE/REUTERS
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Shares in pharmaceutical equipment manufacturer Gerresheimer slumped as much as 38% on Wednesday after Germany’s financial watchdog said the company had violated accounting regulations.
BaFin, the German financial supervisory authority, said Wednesday that it had evidence that Gerresheimer hadn’t abided by the country’s financial regulations. The watchdog initiated an ad-hoc audit of financial statements on Sept. 18, it said.
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30%
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The percentage by which finance chiefs project average price increases for their companies’ products in 2025 would be lower without the addition of tariffs, according to a new survey from Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta.
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Flowers Foods, the Thomasville, Ga.-based maker of Wonder bread and Tastykake snacks, said its longtime CFO, Steve Kinsey, is retiring after more than 35 years at the company. Kinsey, who joined the company in 1989 and has been finance chief since 2007, plans to retire at the end of 2025 and will serve in an advisory role for a period to assist with the transition. Flowers said it has launched a search for Kinsey's successor with the help of an executive-search firm.
—Colin Kellaher contributed to today’s Ledger.
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The Wall Street Journal's CFO Journal offers corporate leaders and professionals CFO analysis, advice and commentary to make informed decisions. We cover topics including corporate tax, accounting, regulation, capital markets, management and strategy. Follow us on X @WSJCFO. The WSJ CFO Journal Team comprises reporters Kristin Broughton, Mark Maurer and Jennifer Williams, and Bureau Chief Walden Siew. You can reach us by replying to any newsletter, or email Walden at walden.siew@wsj.com.
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