On Wednesday, Canaccord Genuity maintained its Buy rating on shares of Lilium N.V. (NASDAQ: LILM), with a constant price target of $2.00. The company, which is in the process of developing electric vertical take-off and landing (eVTOL) aircraft, reported a significant increase in quarterly cash burn due to research and development (R&D) efforts and the assembly of its inaugural full-scale Lilium Jet eVTOL aircraft models.
Lilium's Q1/24 cash burn surged by 53% year-over-year, reaching €94.7 million. This increase was attributed to payments made to aerospace suppliers for essential components and systems. Following this trend, the company's management has revised its cash burn forecast for the first half of 2024 to approximately €190 million, which is an increase from the previously estimated €175 million.
The company anticipates that the cash expenditure for the second half of the year will be slightly above the €190 million mark. Taking into account the liquidity balance of €102 million at the end of the first quarter of 2024 and the recent capital injection of $114 million completed in May, Lilium expects to have around €113 million in cash reserves at the midpoint of 2024.
Lilium's financial update comes after the successful conclusion of a capital raise in May, which added $114 million to the company's funds. This additional capital is deemed crucial as Lilium continues to invest heavily in the development of its eVTOL aircraft, which is part of a new wave of urban air mobility solutions.
In other recent news, Lilium N.V. has seen a flurry of significant developments. The aircraft manufacturing company issued a business update for Q1 2024, although specifics were not detailed, it typically includes financial performance and strategic initiatives. In a strategic move, Lilium established its Asia-Pacific regional headquarters in China's Bao'an District, indicating a plan to penetrate the Chinese and Asia-Pacific markets.
In terms of funding, Lilium successfully raised a total of $114 million, a mix of public and private funding, which will be used to fund the company's operations and upcoming first manned flight test. Following the capital raise, Canaccord Genuity revised its stock price target for Lilium to $2.00, down from its previous $3.00, but maintains a positive outlook for the company's future.
In a significant step towards sustainable air travel, Lilium partnered with UrbanV and Aéroports de la Côte d’Azur to establish a network of vertiports across the French Riviera by 2026. The collaboration aims to integrate eVTOLs into the existing transport infrastructure, promoting environmental sustainability and enhancing regional air mobility.
InvestingPro Insights
In light of Lilium N.V.'s (NASDAQ: LILM) recent financial update, it's pertinent to consider some key metrics and analysis provided by InvestingPro. With a market capitalization of $516.02 million, the company's financial health is under scrutiny, especially considering its significant cash burn. The latest data shows a troubling P/E ratio of -0.12, reflecting investor concerns over profitability. Additionally, the Price / Book ratio, as of the last twelve months ending Q4 2023, stands at a high 12.97, which could suggest the stock is overvalued relative to its net assets.
InvestingPro Tips reveal a mixed picture: while Lilium holds more cash than debt, which is a positive sign of liquidity, the company is quickly burning through cash and has short term obligations that exceed its liquid assets. Moreover, analysts have revised their earnings upwards for the upcoming period, indicating some optimism amidst challenges like weak gross profit margins and the anticipation that the company will not be profitable this year.
For investors seeking to delve deeper into Lilium's financials and future prospects, InvestingPro offers additional analysis and tips. There are 14 more InvestingPro Tips available that could help in making a more informed decision. Interested readers can take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes comprehensive insights and analysis to navigate the complexities of investing in high-growth sectors like urban air mobility.
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