Lucid Group recently announced a public offering, raising approximately $1.75 billion. The company's CEO, Peter Rawlinson, described this as a strategic financial move to ensure sufficient capital for ongoing operations and growth. He noted that investors may have misunderstood this step, resulting in a significant drop in the company's stock price, marking its worst single-day performance in nearly three years.
The offering involved the sale of nearly 262.5 million shares of common stock. Rawlinson emphasized that this funding should alleviate any concerns about potential "going concern" disclosures related to operational funding. He stated that by the fourth quarter of next year, Lucid is expected to secure a stable cash flow, highlighting the importance of avoiding continuous operational financial concerns.
Despite this strategic move, many analysts on Wall Street have expressed negative sentiments, mainly due to the timing. Some analysts believe the fundraising was either unnecessary or premature. By the end of the third quarter, Lucid had a total liquidity of $5.16 billion, which included over $4 billion in cash and investments.
Prior to this announcement, Lucid had disclosed that Saudi Arabia's Public Investment Fund had agreed to provide $1.5 billion in cash to support the company’s expansion plans. Morgan Stanley analyst Adam Jonas noted the size of this fundraising exceeded expectations and occurred sooner than anticipated. RBC Capital Markets analyst Tom Narayan questioned the need for additional funds given the earlier agreement with the PIF and the current low stock price, forecasting a substantial drop in Lucid's share price.
Rawlinson reiterated the company's proactive approach to fundraising, stating that the current financial resources should suffice through 2026. He defended the timing of the move, saying it was a calculated decision to avoid delaying until it became necessary.
Following the announcement, Lucid's stock price fell by about 18%, marking the largest single-day decline since December 2021.
