News

Lucid Group’s $3 Billion Stock Offering Triggers Pre-Market Slide Amidst Saudi Investment Surge

Published by
Matthew Martins
  • Lucid Group announces a $3 billion common stock offering, leading to a 9.5% pre-market decline in shares.
  • Saudi Arabian investors, including the country’s largest sovereign wealth fund, will contribute the majority of the funds through a private placement, maintaining a 60.5% ownership of Lucid’s outstanding common stock.
  • The billions raised are expected to support Lucid’s operations until 2025, allowing the company to explore changes to its business strategy and potentially become a self-funding enterprise.

Shares of Lucid Group (NASDAQ:LCID) experienced a 9.5% decline in pre-market trading on Thursday as the electric vehicle (EV) company announced a significant common stock offering, aimed at raising $3 billion. The move comes as Lucid aims to secure additional funding for its operations and strategic growth plans. However, the announcement also raised concerns among investors about potential dilution and its impact on the company’s future trajectory.

The majority of the funds raised through this offering are expected to come from Saudi Arabian investors. Lucid revealed that Saudi Arabia’s largest sovereign wealth fund will be participating in a private placement, acquiring $1.8 billion worth of LCID stock. Ayar Third Investment Company, based in Saudi Arabia, will retain approximately 60.5% ownership of Lucid’s outstanding common stock following the completion of the deal, solidifying its position as a major shareholder.

While this stock offering may result in a notable dilution of existing shares, it also signals a departure from earlier expectations that Lucid would become a private company in the near term. The influx of funds from this offering will provide the company with additional capital to fuel its operations and strategic initiatives for the foreseeable future.

According to analysts from Morgan Stanley, the billions raised by Lucid through this stock offering will play a crucial role in funding the company’s operations through 2025. Their estimates suggest that Lucid will allocate $2.4 billion for the remainder of 2023, followed by $2.2 billion in 2024, and $1.2 billion in 2025. This influx of capital is expected to support Lucid’s continued growth and position it favorably in the competitive EV market.

The analysts further emphasized that the ability to access such a substantial amount of equity financing is unique and grants Lucid greater time and resources to explore changes to its business model, cost structure, and overall strategy. This additional flexibility may pave the way for Lucid to become a self-funding enterprise in the future.

The major investment from Saudi Arabian sources not only strengthens Lucid’s financial position but also signifies a vote of confidence in the company’s potential. Lucid has emerged as a formidable player in the EV industry, showcasing its flagship luxury electric sedan, the Lucid Air, which has garnered critical acclaim and demonstrated remarkable technological advancements.

Matthew Martins

Share
Published by
Matthew Martins

Recent Posts

Tesla Unveils Refreshed Model 3 in North America with Exciting Upgrades

Model 3 Refresh: Tesla introduces a restyled Model 3 in North America, featuring a rear…

January 11, 2024

SEC Twitter Account Compromised, False Bitcoin ETF Approval Post Triggers Market Volatility

Unidentified individual accessed SEC's Twitter through a third party. Lack of two-factor authentication heightened vulnerability.…

January 11, 2024

Global Currency Markets Navigate Economic Uncertainties: Yen Weakens, Dollar Awaits U.S. Inflation Data

Japanese yen falls against the dollar and euro due to persistently shrinking real wages for…

January 11, 2024

Oil Prices Unmoved as Unexpected U.S. Inventory Build Raises Concerns

Unexpected Inventory Build: U.S. crude inventories unexpectedly grew, sparking concerns about weakening fuel demand and…

January 11, 2024

YanGuFang International Group Appoints Interim Executives Amidst CEO and CFO Detainment

Leadership Shake-up: CEO and CFO of YanGuFang International Group detained by Shanghai Police, prompting interim…

January 11, 2024

Cryptocurrency Market Analysis: SHIB, SOL, and ETH Navigate Challenging Terrain

SHIB breaches 200-day EMA, signaling bearish sentiment. Historical data suggests strong buyer reactions and potential…

January 11, 2024