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LCID sheds 13% with $3 billion share sale

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Share:

  • Lucid plans on issuing $1.2 billion in new shares to the public.
  • Its existing majority shareholder will purchase $1.8 billion in new common stock.
  • This dilutes the share count by approximately 21%.
  • LCID stock traded down to $6.75 in Thursday’s premarket.

 

Lucid Group (LCID), the maker of the Lucid Air luxury electric sedan, surprised shareholders late Wednesday when it announced that it would raise $3 billion in new common stock. This would dilute existing shares outstanding by about 24%, and LCID stock is trading 13% lower in Thursday’s premarket at $6.75. 

Stock futures are mixed early Thursday after the US House passed the debt-ceiling bill late Wednesday, which was already expected.

Lucid stock news

Lucid will offer 173,544,948 shares of its common stock to the public off the current count of shares outstanding of 1.83 billion. Additionally, the EV maker will sell $1.8 billion worth of common stock to Ayer Third Investment, an affiliate of its majority shareholder, the Public Investment Fund (PIF). The PIF is a sovereign wealth fund from Saudi Arabia, and the purchase will allow it to maintain its 60.5% ownership stake in Lucid.

In total, the PIF affiliate will purchase 265,693,703 shares of LCID. Between the public offering and the private sale to PIF, Lucid’s share count will rise by nearly 440 million shares to 2.27 billion.

In its announcement regarding the equity sale, Lucid said, “The underwriter may offer the shares of common stock from time to time for sale in one or more transactions to purchasers directly, through agents or through brokers in brokerage transactions on Nasdaq, in the over-the-counter market, through negotiated transactions or in a combination of such methods, or otherwise at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices.”

Lucid, headed up by CEO Peter Rawlinson, said it would use the proceeds of the shelf sale for capex and working capital needs. Lucid is working on ramping up production of its Lucid Gravity SUV model that it expects to outsell the award-winning Lucid Air, but the company has been experiencing production difficulties for the last three quarters. Bank of America Securities is the book runner on the public offering.

Lucid stock forecast

Lucid stock will almost certainly trend down to its recent support at $6.20. This level is where the LCID stock price found support during late December of last year and the first few sessions this January. There is no certainty that it will hold up though. The Relative Strength Index (RSI) is rather sanguine at the moment (above 50), but Lucid stock has already been trending down since its swing high to $17.80 on January 27. Any break above the $8.28 or $8.69 resistance levels would be necessary to bring bulls back to the table.

LCID daily chart

 

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