Lucid Stock Dump More Than 15% As EV-maker Lucid Expects to Raise $1.67 Billion From Stock Sale And Expected Bad Financial Result

Lucid, the electric luxury sedan manufacturer, announced on Thursday that it expects to raise $1.67 billion through a combination of public and private stock sales, involving approximately 637 million shares.

The announcement, along with a forecast of a larger-than-expected Q3 loss, triggered a steep drop in Lucid's stock price, which fell by as much as 16.5% during trading hours to $2.74, its lowest since July 2.

The company projects an operating loss for the quarter ending September 30 between $765 million and $790 million, surpassing the $751.7 million loss forecasted by analysts, as per LSEG data.

Lucid's fundraising effort includes a public offering of over 262 million shares and a private placement deal with its largest shareholder, Ayar Third Investment, an affiliate of Saudi Arabia's Public Investment Fund. Ayar will purchase nearly 375 million shares in the private placement and maintain its 59% ownership stake in Lucid.

Ayar had previously committed an additional $1.5 billion in August, which Lucid initially believed would provide sufficient liquidity until the fourth quarter of next year.

As of the end of Q2, Lucid had $1.35 billion in cash and cash equivalents. The proceeds from the stock sale and private placement will be used for general corporate purposes, capital expenditures, and working capital.

From my perspective as an analyst, this latest move suggests that Lucid is facing serious liquidity challenges despite prior efforts to secure funding. While the $1.67 billion from the stock sale will temporarily ease financial pressure, it raises concerns about the company’s ability to manage its cash flow in the long term.

With Ayar maintaining a significant ownership stake, it shows confidence in Lucid’s future, but investors should remain cautious, as the widening losses may indicate deeper operational issues that need addressing.

In my opinion, the upcoming quarters will be critical for Lucid to show signs of improvement, particularly in scaling production and reducing costs, if it wants to regain investor confidence.