Shares of Lucid Group Inc. went up 6% in Monday’s extended session after the company got a $1.5 billion commitment from Saudi Arabia’s sovereign wealth fund. This was more important news than the company’s quarterly results.
Most of Lucid’s stock is owned by Ayar Third Investment Co., which is a branch of the Public Investment Fund. The company said it had reached an agreement with 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 company said that the $1.5 billion promise from Saudi Arabia’s sovereign wealth fund should be enough cash flow until at least the fourth quarter of 2025.
A note from RBC Capital analyst Tom Narayan on Monday said that the deal gave Lucid a “extra liquidity cushion” and showed that the PIF is committed to Lucid’s long-term success.
Garrett Nelson, a CFRA analyst, said that Lucid’s business model is “unsustainable” because it burns through cash quickly and doesn’t have enough scale. However, he added that “the cash infusion helps extend its runway and will likely provide a near-term boost to investor sentiment towards the name.”
Nelson said that short-sellers’ interest in Lucid’s shares “remains extremely high,” at about 27% of the float. This makes the company more risky.
Lucid said it would use the money from the private placement and any money from the term loan for general business purposes. These could include working capital and capital expenditures.
The company that makes electric vehicles lost $790 million, or 34 cents per share, in the second quarter. This is down from $764 million, or 40 cents per share, in the same quarter last year.
The company lost 29 cents per share after one-time items were taken into account.
Lucid’s sales went up from $151 million to $201 million in one year.
FactSet polled analysts and found that they thought the company would report a loss of 27 cents on sales of $190.3 million.
At the end of the quarter, Lucid had about $4.28 billion in cash on hand and stuck to its plan to make about 9,000 EVs this year.
Cantor Fitzgerald’s Andres Sheppard said that Lucid has about $4.28 billion in cash on hand, down from about $5.03 billion in the first quarter.
Lucid plans to begin making the Gravity electric SUV in the fourth quarter, and Sheppard wrote in his notes that the first deliveries should happen in 2025.
This electric car has seven seats and a battery range of about 440 miles. It costs around $80,000 to buy.
Monday’s stock market crash sent Lucid shares down almost 4% by the end of the regular trading day. The stock is down 29% so far this year, while the S&P 500 index SPX -3.00% has gone up about 9%.
