Lucid gets $1.5 billion lifeline from Saudi Arabia, Wall Street cheers 'liquidity cushion'

By Claudia Assis

Lucid says the $1.5 billion is enough to keep the company going through 2025; EV maker posts narrower Q2 loss

Lucid Group Inc. shares rallied 6% in the extended session Monday after the EV maker got a $1.5 billion commitment from Saudi Arabia's sovereign wealth fund, news that eclipsed the company's quarterly results.

Lucid (LCID) said it reached an agreement with majority stockholder Ayar Third Investment Co., an affiliate of the Public Investment Fund, for Ayar to buy $750 million in convertible preferred stock through a private placement, and also provide a $750 million delayed-draw term loan facility.

The $1.5 billion commitment from Saudi Arabia's sovereign wealth fund is likely to provide sufficient liquidity into at least the fourth quarter of 2025, the company said.

The deal provided an "extra liquidity cushion" to Lucid and also showed that the PIF is committed to Lucid's long-term success, RBC Capital analyst Tom Narayan said in a note Monday.

CFRA analyst Garrett Nelson said that while he views Lucid's business model as "unsustainable" thanks to its cash-burn rate and lack of scale, "the cash infusion helps extend its runway and will likely provide a near-term boost to investor sentiment toward the name."

Short-seller interest in Lucid's shares "remains extremely high," around 27% of the float, which raises its risk profile, Nelson said.

Lucid said that it plans to use the proceeds from the private placement and any proceeds from the term loan for general corporate purposes, which could include capital expenditures and working capital.

The EV maker lost $790 million, or 34 cents a share, in the second quarter, compared with $764 million, or 40 cents a share, in the year-ago quarter.

Adjusted for one-time items, the company lost 29 cents a share.

Lucid's revenue rose to $201 million, from $151 million a year ago.

Analysts polled by FactSet expected the company to report a loss of 27 cents on sales of $190.3 million.

Lucid ended the quarter with approximately $4.28 billion of total liquidity, and stuck with its guidance of making about 9,000 EVs this year.

Andres Sheppard at Cantor Fitzgerald said that Lucid now has about $4.28 billion in liquidity, compared with about $5.03 billion in the first quarter.

Lucid is on track to start production of the Gravity electric SUV in the fourth quarter, and Sheppard said in his notes that he expects initial deliveries in 2025.

The seven-seater EV has a starting price of around $80,000 and a battery range of about 440 miles.

Shares of Lucid ended the regular trading day down nearly 4%, engulfed by Monday's stock-market rout. So far this year, the stock is down 29%, contrasting with gains of around 9% for the S&P 500 index SPX.

-Claudia Assis

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08-05-24 2013ET

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