Lucid Motors plans USD 1.67 billion stock sale amid financial struggles

Electric vehicle manufacturer Lucid Motors has said it plans to raise about USD 1.67 billion through a combination of a public offering and a private placement of about 637 million shares. The announcement arrives as the company faces steep financial daunts, including a forecasted third quarter loss that's larger than projected.

Lucid's shares plunged as much as 16.5 percent to USD 2.74 after the news, its lowest since early July. Based on data from LSEG, the company expects to post an operational loss of up to USD 765 million to USD 790 million for the quarter ending September 30, compared to its earlier estimation of USD 751.7 million.

More than 262 million shares will also go on sale in the public offering, while nearly 375 million shares will be sold in a private placement to Ayar Third Investment, Lucid's largest shareholder in Saudi Arabia which is an affiliate of Public Investment Fund. After the transaction, Ayar is expected to own approximately 59% of Lucid’s outstanding shares.

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Garrett Nelson, senior equity analyst at CFRA Research, commented on the decision to issue new equity after the company's stock slumped on his view that issuing more equity at this time could be risky after the company's stock value has dropped steeply over the past few quarters. "However, while being able to offer does help with liquidity, seeing equity issued by the aide after such a sharp recoil is a monster red flag," he noted.

Ayar Third Investment had already committed an additional USD 1.5 billion in August, which Lucid had been planning to keep it up till the end of fourth quarter 2024. The company had around USD 1.35 billion in cash and cash equivalents at the end of the second quarter.

Proceeds from the stock sale and private placement will be used for general corporate expenses, capital expenditures, and working capital as Lucid seeks to shore up its finances in what is a fiercely competitive electric vehicle market.