Lucid Motors CEO Peter Rawlinson poses on the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins buying and selling on the Nasdaq inventory trade after finishing its enterprise mixture with Churchill Capital Corp IV in New York Metropolis, New York, July 26, 2021.
Andrew Kelly | Reuters
DETROIT — Traders misinterpreted a public providing on Wednesday by Lucid Group that raised roughly $1.75 billion — and led to the inventory’s worst every day efficiency in almost three years, CEO Peter Rawlinson advised CNBC.
Rawlinson stated the increase, which included a public providing of almost 262.5 million shares of its widespread inventory, was a well timed, strategic enterprise determination to make sure the electrical automobile firm has sufficient capital for its ongoing operations and development plans. It additionally ought to alleviate any potential worries that the corporate would want to challenge a “going concern” disclosure relating to its operations, he stated.
“We would signaled that we had a money runway to This autumn subsequent 12 months. As a Nasdaq firm, we’ve got to keep away from a going concern. And a going concern is issued inside 12 months of your monetary runway,” Rawlinson stated Monday from the corporate’s newly opened workplaces in suburban Detroit. “So, it ought to have been no shock to anyone.”
However Wall Road analysts largely took a destructive view of the transfer because of its timing. A number of stated the increase was pointless or got here sooner than anticipated for the corporate, which had $5.16 billion of whole liquidity to finish the third quarter. That included greater than $4 billion in money, money equivalents and funding balances.
The introduced transactions additionally come two months after Lucid stated Saudi Arabia’s Public Funding Fund had agreed to provide the corporate with $1.5 billion in money, because the EV maker appears to be like so as to add new fashions to its product line.
“A cap increase was barely bigger and sooner than we had anticipated,” Morgan Stanley analyst Adam Jonas wrote following the increase being introduced Wednesday after markets closed.
Lucid’s inventory
RBC Capital Markets analyst Tom Narayan shared related ideas: “We suspect that buyers will marvel why LCID is elevating extra capital simply after it secured the PIF capital in August, and at presently depressed share value ranges. We anticipate Lucid shares to commerce sharply decrease because of this,” he wrote in an investor notice Wednesday night time.
Rawlinson on Monday reiterated that the corporate would increase capital “opportunistically.” He stated the corporate’s present funds now safe its capital into 2026, forward of it launching a brand new midsize platform later that 12 months.
“That is precisely as anticipated. It’s precisely to the playbook. It ought to have come as zero shock to anybody,” he stated. “And why did I select this second? As a result of I did not need to string it out to the top, as a result of I did not must.”
Shares of Lucid declined about 18% on Thursday after the announcement — marking the worst every day decline for the corporate since December 2021.
Rawlinson stated Lucid is presently in a extremely capital-intensive funding interval because it expands its sole U.S. manufacturing facility in Arizona; builds a second plant in Saudi Arabia; prepares to launch its second product, an SUV known as Gravity; develops its next-generation powertrain; and builds out its retail and repair community.
“These 5 classes are the long-term funding for the long run that we’re making now,” Rawlinson stated. “Have we obtained to chop prices with each automobile we’re making? Completely.”
Wednesday’s announcement was made at the side of plans for Lucid’s majority stockholder and affiliate of PIF, Ayar Third Funding Co., to buy greater than 374.7 million shares of widespread inventory from Lucid to keep up its roughly 59% possession of the corporate.
Such a transaction known as professional rata, which permits an investor reminiscent of PIF to take part in future rounds of financing and retain its possession stake. It is one thing the PIF has routinely finished with Lucid.
Particular person buyers have been probably involved by share dilution following the motion, however Rawlinson stated the continued assist of the PIF ought to be considered as a constructive.
“I believe it has been misinterpreted and misreported,” Rawlinson stated. “The norm is to go professional rata. If we did not go professional rata, it absolutely could be a sign that the PIF have been dropping religion in us.”
Lucid final week stated the general public providing was anticipated to boost about $1.67 billion, with a 30-day choice for underwriter BofA Securities to buy as much as almost 39.37 million extra shares of Lucid’s widespread inventory as effectively.
Lucid has reported report deliveries in 2024 of its present mannequin, an all-electric sedan known as Air. The corporate expects to provide 9,000 automobiles this 12 months. Manufacturing of its Gravity SUV is anticipated to start out by the top of this 12 months.
Nonetheless, Lucid’s gross sales and monetary efficiency haven’t scaled as shortly as anticipated following greater prices, slower-than-expected demand for EVs, and advertising and consciousness issues for the corporate.
— CNBC’s Michael Bloom contributed to this report.
