What Happened?
Shares of luxury electric car manufacturer Lucid (NASDAQ:LCID) fell 5.5% in the morning session after the major indices tumbled (Nasdaq down 1.9%, S&P 500 down 1.7%), marking a volatile ending to an otherwise good year for stocks. This marks the second straight day of broad-based declines with similar downturns (Nasdaq down 1.5%, S&P 500 down 1.1%) recorded on the previous trading day, Friday, December 27, 2024. This suggests that perhaps investors are locking in gains and positioning portfolios for 2025.
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What The Market Is Telling Us
Lucid’s shares are extremely volatile and have had 54 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 19.5% on the news that the company announced an underwritten public offering of roughly 262 million shares of its common stock.
Separately, majority stockholder Ayar Third Investment Company, an affiliate of Saudi Arabia's Public Investment Fund, agreed to buy 375 million shares of common stock from Lucid in a private placement. Following the deal, Ayar is expected to maintain approximately 58.8% ownership of Lucid's common stock.
Overall, Lucid is expected to raise gross proceeds of $1.67 billion from the offerings. The offering is likely to have a negative impact on its stock price as the newly issued shares dilute the ownership of existing shareholders.
Separately, the company provided preliminary operating loss guidance of $765 million and $790 million for the third quarter, below analysts' expectations.
Lucid is down 26.3% since the beginning of the year, and at $3.06 per share, it is trading 28.2% below its 52-week high of $4.26 from August 2024. Investors who bought $1,000 worth of Lucid’s shares at the IPO in September 2020 would now be looking at an investment worth $309.44.
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