Lucid Group’s shares dropped more than 10% in after-hours trading after the electric vehicle startup announced a public offering of nearly 262.5 million shares of its common stock. This offering was made in conjunction with plans for Lucid’s majority stockholder, Ayar Third Investment Co., to purchase more than 374.7 million shares of common stock from Lucid in a private placement concurrently with the public offering. Following the transaction, Ayar is expected to maintain its approximate 58.8% ownership of Lucid’s outstanding common stock. The transactions are subject to certain conditions and are expected to be at the same price per share initially paid by the underwriter for the public offering.
BofA Securities is acting as the sole underwriter for the public offering, and Lucid intends to grant the firm a 30-day option to purchase up to nearly 39.37 million additional shares of its common stock. The net proceeds from the public offering, as well as from the private placement by its majority stockholder, will be used for general corporate purposes, including capital expenditures and working capital, according to the company. These announced transactions come after Lucid received $1.5 billion in cash from the PIF two months prior, as the company looks to expand its product line with new models.
Despite these financial transactions, Lucid’s sales and financial performance have not met initial expectations due to higher costs, slower-than-expected demand for EVs, and marketing and awareness challenges. This has led to a 22% decline in Lucid’s shares this year, with the stock closing at $3.28 a share and the company having a market cap of $7.6 billion with 2.32 billion shares outstanding. Lucid ended the second quarter with $1.35 billion in cash and cash equivalents, slightly down from $1.37 billion at the end of 2023.
The public offering and private placement of shares aim to provide Lucid with the necessary capital to support its general corporate purposes, including funding for capital expenditures and working capital. By involving its majority stockholder Ayar Third Investment Co. in the transaction, Lucid is ensuring continued support from a key investor. The collaboration with BofA Securities as the sole underwriter for the offering also demonstrates confidence in Lucid’s growth potential and a commitment to securing the necessary funds for future initiatives.
Moving forward, Lucid will need to address the challenges that have impacted its sales and financial performance in order to regain investor confidence and improve its market position. By using the proceeds from the public offering and private placement strategically, the company can invest in key areas of development and address any operational inefficiencies that may have contributed to its recent performance. Overall, the announced transactions represent a significant step in Lucid’s financial strategy and reflect its commitment to long-term growth and success in the competitive electric vehicle market.
