DETROIT \u2014 Investors misinterpreted a\u00a0public offering\u00a0last week by\u00a0Lucid Group\u00a0that raised roughly $1.75 billion \u2014 and led to the stock\u2019s worst daily performance in nearly three years \u2014 CEO Peter Rawlinson told CNBC.<\/p>\n
Rawlinson said the raise, which included a public offering of nearly 262.5 million shares of its common stock, was a timely, strategic business decision to ensure the electric vehicle company has enough capital for its ongoing operations and growth plans. It also should alleviate any potential worries that the company would need to issue a \u201cgoing concern\u201d disclosure regarding its operations, he said.<\/p>\n
\u201cWe\u2019d signaled that we had a cash runway to Q4 next year.\u00a0As a Nasdaq company, we have to avoid a going concern. And a going concern is issued within 12 months of your financial runway,\u201d Rawlinson said Monday from the company\u2019s newly opened offices in suburban Detroit. \u201cSo, it should have been no surprise to anybody.\u201d<\/p>\n
But\u00a0Wall Street\u00a0analysts largely took a negative view of the move due to its timing. Several said the raise was unnecessary or came earlier than expected for the company, which had $5.16 billion of total liquidity to end the third quarter. That included more than $4 billion in cash, cash equivalents and investment balances.<\/p>\n
The announced transactions also come two months after Lucid said Saudi Arabia\u2019s Public Investment Fund had agreed to supply the company with\u00a0$1.5 billion in cash, as the EV maker looks to add new models to its product line.<\/p>\n
\u201cA cap raise was slightly larger and earlier than we had expected,\u201d Morgan Stanley analyst Adam Jonas wrote following the raise being announced Wednesday after markets closed.<\/p>\n
RBC Capital Markets analyst Tom Narayan shared similar thoughts: \u201cWe suspect that investors will wonder why LCID is raising more capital just after it secured the PIF capital in August, and at currently depressed share price levels. We expect Lucid shares to trade sharply lower as a result,\u201d he wrote in an investor note Wednesday night.<\/p>\n
Rawlinson on Monday reiterated that the company would raise capital \u201copportunistically.\u201d He said the company\u2019s current funds now secure its capital into 2026, ahead of it launching a new midsize platform later that year.<\/p>\n
\u201cThis is exactly as expected. It is exactly to the playbook. It should have come as zero surprise to anyone,\u201d he said. \u201cAnd why did I choose this moment? Because I didn\u2019t want to string it out to the end, because I didn\u2019t have to.\u201d<\/p>\n
Shares of Lucid declined roughly 18% on Thursday after the announcement \u2014 marking the worst daily decline for the company since December 2021.<\/p>\n
Rawlinson said Lucid is currently in a highly capital-intensive investment period as it expands its sole U.S. factory in Arizona; builds a second plant in Saudi Arabia; prepares to launch its second product, a SUV called Gravity; develops its next-generation powertrain; and builds out its retail and service network.<\/p>\n
\u201cThose five categories are the long-term investment for the future that we\u2019re making now,\u201d Rawlinson said. \u201cHave we got to cut costs with every car we\u2019re making? Absolutely.\u201d<\/p>\n
Last week\u2019s announcement was made in conjunction with plans for Lucid\u2019s majority stockholder and affiliate of PIF, Ayar Third Investment Co., to purchase more than 374.7 million shares of common stock from Lucid to maintain its roughly 59% ownership of the company.<\/p>\n
Such a transaction is called pro rata, which allows an investor\u00a0such as PIF to participate in future rounds\u00a0of financing and retain its ownership stake. It\u2019s something the PIF has routinely done with Lucid.<\/p>\n
Individual investors were likely concerned by share dilution following the action, but Rawlinson said the continued support of the PIF should be viewed as a positive.<\/p>\n
\u201cI think it\u2019s been misinterpreted and misreported,\u201d Rawlinson said. \u201cThe norm is to go pro rata. If we didn\u2019t go pro rata, it surely would be a signal that the PIF were losing faith in us.\u201d<\/p>\n
Lucid last week said the public offering was expected to\u00a0raise about $1.67 billion, with a 30-day option for underwriter BofA Securities to purchase up to nearly 39.37 million additional shares of Lucid\u2019s common stock as well.<\/p>\n
Lucid has reported record deliveries this year of its current model, an all-electric sedan called Air. The company expects to produce 9,000 vehicles this year. Production of its Gravity SUV is expected to start by the end of this year.<\/p>\n
However, Lucid\u2019s sales and financial performance\u00a0have not scaled as quickly as expected\u00a0following higher costs, slower-than-expected\u00a0demand for EVs, and marketing and awareness problems for the company.<\/p>\n<\/p>\n
DETROIT \u2014 Investors misinterpreted a\u00a0public offering\u00a0last week by\u00a0Lucid Group\u00a0that raised roughly $1.75 billion \u2014 and led to the stock\u2019s worst daily performance in nearly three years \u2014 CEO Peter Rawlinson told CNBC. Rawlinson said the raise, which included a public offering of nearly 262.5 million shares of its common stock, was a timely, strategic business […]<\/p>\n","protected":false},"author":0,"featured_media":11529,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-11528","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/11528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=11528"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/11528\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/11529"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=11528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=11528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=11528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}