Lucid Group’s Stock Takes a Hit After Announcing Massive Share Sale
Electric vehicle startup Lucid Group saw its stock plummet by over 10% in after-hours trading following the announcement of a massive public offering of nearly 262.5 million shares of its common stock. This move comes as a surprise to many, especially considering the company’s struggles to meet initial expectations.
Ayar Third Investment Co. to Purchase Millions of Shares
In conjunction with the public offering, Lucid’s majority stockholder, Ayar Third Investment Co., an affiliate of Saudi Arabia’s Public Investment Fund, will purchase over 374.7 million shares of common stock from Lucid in a private placement. This transaction will allow Ayar to maintain its approximate 58.8% ownership of Lucid’s outstanding common stock.
The Deal’s Fine Print
The transaction is subject to certain conditions and will be priced at the same per-share rate as the public offering. BofA Securities is acting as the sole underwriter for the public offering, with an option to purchase up to nearly 39.37 million additional shares of Lucid’s common stock.
What’s Next for Lucid?
Lucid plans to use the net proceeds from the public offering and private placement for general corporate purposes, including capital expenditures and working capital. This move comes two months after the company received a $1.5 billion cash injection from the PIF to support its product line expansion.
Challenges Ahead
Despite the influx of cash, Lucid faces significant challenges. The company’s sales and financial performance have fallen short of expectations due to higher costs, slower-than-expected demand for EVs, and marketing and awareness issues. Shares of Lucid have dropped 22% this year, with the company’s market cap currently standing at $7.6 billion.
A Critical Moment for Lucid
As the company navigates these challenges, the success of this share sale will be crucial in determining its future trajectory. With its stock closing at $3.28 a share on Wednesday, up less than 1%, all eyes will be on Lucid’s next move. Will the company be able to overcome its struggles and regain investor confidence? Only time will tell.
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