In a move that sent shares of the luxury EV manufacturer down 9% after market hours, Lucid revealed its ambitions to raise around $3 billion through a public offering, with nearly two-thirds coming from Saudi Arabia’s Public Investment Funds, PIF.
PIF owns more than 60% of the company and has agreed to buy 265.7 million shares in a private placement for about $1.8 billion. According to the EV manufacturer, this implies a price of around $6.50 per Lucid share, down from the stock’s closing price of $7.76 announced on May 31.
The necessary additional funds arrive as the automaker, like its competitors, battles rising losses and diminishing cash on hand amid recessionary concerns and a price war instigated by market leader Tesla.
Louis Navellier, a chief investment officer of money management company Navellier, which has made EV and related investments but has avoided Lucid, said that the secondary offering “will probably be ok as there’s a lot of ESG dollars looking for investments.”
Navellier adds, “That, combined with funding from the Saudia, will guarantee Lucid’s survival for a few more years. However, their burn rate needs to decrease rapidly. In response to the oversupply of EVs on the market in the U.S., rivals are lowering their prices and offering discounts.”
Lucid’s cash and cash equivalents had dropped to $900 million at the end of the first quarter from $1.74 billion in the previous quarter.
According to CFO Sherry House, the business has around $4.1 billion in cash on hand, which is sufficient to fund the EV manufacturer until the second quarter of next year.
In addition to reporting lower first-quarter sales than anticipated, the manufacturer of luxury Air sedans this month revised its 2023 production target downward. CEO Peter Rawlinson cited higher borrowing rates as a market problem.
Despite Lucid’s challenges, Saudi Arabia’s PIF, headed by Crown Prince Mohammed bin Salman, has remained a steadfast investor in the automaker, with a stake now valued at nearly $9 billion.
Ultimately, the Saudi Arabian government has pledged to purchase up to 100,000 Lucid vehicles over the next decade, and the California-based EV manufacturer is constructing its first overseas production facility there.
