Lucid shares plunge after restructuring reports; company denies
Lucid shares fell more than 40% after reports it engaged restructuring advisers and considered bankruptcy or a go‑private option. The company denied the reports and said it has liquidity into next year.
On July 15, Lucid Group’s stock rose modestly in premarket trading to $4.73 after tumbling more than 40% a day earlier following reports that the electric-vehicle maker had engaged restructuring advisers and was exploring bankruptcy protection or a go-private transaction. The company denied those reports.
Lucid said in a statement it has not formed a special board committee to consider those options and that it is working with AlixPartners to improve execution and strengthen operations. The statement added, “AlixPartners is assisting us in that and nothing else and has not recommended bankruptcy to management or the Board.” It also noted, “The company has sufficient liquidity to carry its operations well into next year, as recently published in its last quarterly filings.”
Recent financial results show mounting losses. In the most recent quarter, operating loss rose to more than $989 million from $691 million a year earlier, and net loss widened to over $1.02 billion from $366 million. Annual results for the prior year showed a loss of more than $2.7 billion. The company is burning roughly $1 billion per quarter.
At the end of the last quarter, Lucid reported about $700 million in cash and cash equivalents and $1.46 billion in inventories. Given the current cash burn, additional financing will likely be needed to fund operations and planned initiatives.
Saudi Arabia’s Public Investment Fund holds about 45.38% of Lucid. The company expanded its share count to roughly 390 million from 164 million in 2021 through equity issuances.
Analyst estimates project a per-share loss of about $7.97 for the current year, an improvement from roughly $10.00 last year, with losses forecast to narrow to about $4.75 per share the following year. Analysts do not expect Lucid to be profitable in the near term.
Operational and strategic reviews have led to layoffs. Advisors recommended slowing expansion in Europe and accelerating a commercial relationship with Uber; Uber owns about 3.51% of Lucid.
After the initial sell-off, some investors bought shares on the dip while others sold amid concern about funding and the path to profitability. The stock has remained volatile as market participants assess the company’s cash position, quarterly losses, inventory levels and the need for further financing.
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