Lucid nasdaq Lcid Stock Soars on Back of Key Shareholder Investment

Lucid (NASDAQ: LCID) Stock Soars on Back of Key Shareholder Investment

Lucid Group (NASDAQ: LCID) stock jumped 6% on Monday following a significant investment infusion from its primary shareholder.

Lucid Group (LCID), a California-based electric vehicle (EV) manufacturer, has inked a significant agreement with its majority stockholder, Ayar Third Investment Company. 

Under the terms of the agreement, Ayar, an affiliate of the Public Investment Fund (PIF), will inject $1 billion into Lucid by purchasing a newly created series of convertible preferred stock through a private placement.

The company plans to utilize the proceeds from the investment for various corporate purposes and capital expenditures.

Peter Rawlinson, CEO and CTO of Lucid Group expressed gratitude for the continued support from PIF, emphasizing their pivotal role in the company’s growth trajectory.

He noted,

“With their support, we remain focused upon accelerating our growth via deliveries, executing key business initiatives with relentless focus upon cost, and launching our game-changing Gravity SUV later this year.”

Lucid 2024 Production Target

Lucid (LCID), like several other EV startups, has faced challenges amid a slowdown in demand growth and intensified competition, particularly from industry leader Tesla (NASDAQ: TSLA). Despite these headwinds, Lucid aims to ramp up production, with plans to manufacture 9,000 units in 2024, compared to 8,428 vehicles produced last year.

The company’s flagship product, the Lucid Air luxury sedan, competes directly with Tesla’s Model S and other luxury EVs offered by established brands such as Mercedes-Benz, BMW, Audi, and Porsche.

Andres Sheppard, Senior Equity Analyst at Cantor Fitzgerald, noted that the investment from Ayar will extend Lucid’s capital runway, allowing the company to ramp up production. Sheppard forecasts Lucid to produce 9,500 vehicles in 2024, with production potentially rising to 20,000 units by 2025.

Lucid had previously stated in its fourth-quarter financial presentation that it had ample liquidity “at least until 2025” and projected $1.5 billion in capital spending for 2024, specifically to support the launch of its Gravity SUV line later this year. The company closed out 2023 with $4.8 billion in available funds, including $4.3 billion in cash.

Lucid (NASDAQ: LCID) Stock Reaction

LCID stock surged 5.42% to close at $2.92 on Monday. The traders had exchanged hands with 104,447,280 (104.44 million) shares compared to the average daily trading volume of 37.99 million.