$Lucid Group (LCID.US)$ Right now LCID stock has a market ca...

$Lucid Group (LCID.US)$ Right now LCID stock has a market cap of $62 billion. That represents just 11.2 times its 2023 forecast sales. This is an aggressive valuation, but it’s not completely unrealistic.

To get this far, the company is going to have to spend a good deal on capital expenditures (capex). During a conference call, CFO Sherry House said Lucid’s capex spending will rise next year. It is going to pull forward $350 million of future capex spending to 2022.

As a result, Lucid is lucky to have enough cash on its balance sheet. The CFO said the $4.6 billion in cash it expects to have on its balance sheet will get it through 2022.

However, just to make sure things work out, the company closed on a $1.75 billion convertible senior note offering on Dec. 10. This debt financing comes with a low 1.25% coupon rate, so the interest costs won’t be too severe. Depending on how much it burns through in this quarter, this will substantially increase its cash pile.