EV maker Lucid rallies after $1 billion investment by majority stockholder as it burns cash

By Steve Gelsi

Affiliate of Saudi sovereign wealth fund will buy $1 billion of a new series of convertible preferred stock via private placement

Lucid Group Inc.'s stock was up 6% on Monday after the cash-burning electric-vehicle maker said its majority stockholder will buy $1 billion worth of its stock, even as other EV companies continue to face headwinds.

Lucid Group (LCID) said Saudi Arabia-based Ayar Third Investment Co. - an affiliate of the Public Investment Fund, the Saudi sovereign wealth fund - has agreed to purchase $1 billion worth of a new series of convertible preferred stock via private placement, subject to customary closing conditions.

The $1 billion in new capital for Lucid comes after the company used about $3.07 billion in cash in 2023, including all cash provided by financing activities, according to its annual report.

The company reported $2.49 billion in cash used in operations and $947 million used in investing activities in 2023, with a total decrease in cash of $365.8 million for the year.

The fresh $1 billion it's getting will provide it with about four months of cash, based on its total use of $3 billion in cash last year.

Lucid's stock was generating volume of more than 87 million shares in afternoon action. Its average 65-day daily volume level is about 36 million shares.

"Lucid intends to use the net proceeds from the private placement for general corporate purposes, which may include, among other things, capital expenditures and working capital," the company said.

Lucid Group, based in Newark, Calif., said it is planning to launch its Gravity sport-utility vehicle later this year. It rolled out its first car, the Lucid Air, to customers in October 2021.

Including Monday's trades, Lucid Group's stock is down about 25% so far in 2024, as prospects for electric vehicles have cooled off of late.

Tesla Inc. (TSLA), Nio Inc. (NIO) and Rivian Automotive Inc. (RIVN) were all downgraded Monday by Mizuho on weaker demand for EVs and downward pressure on prices.

Also read: Tesla, Nio and Rivian all downgraded on slowing EV demand, pricing pressures

Meanwhile, Fisker Inc.'s stock (FSR) rose 1% despite a comment by the EV maker that negotiations with an unnamed carmaker had broken down.

Also read: Fisker's stock tumbles further as talks with carmaker fall through

-Steve Gelsi

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03-25-24 1552ET

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