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Lucid (LCID) to Get $1B Investment From Saudi's PIF Affiliate
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Lucid Group, Inc. (LCID - Free Report) is raising $1 billion in capital from Ayar Third Investment Company, an affiliate of Saudi Arabia’s Public Investment Fund (“PIF”).
The recent investment by a sovereign wealth fund offers Lucid a competitive advantage over other struggling electric vehicle (EV) startups.
In an effort to diversify the Kingdom's economy, the Saudi government has already made massive investments in Lucid, per Reuters. It holds 60% stakes in LCID.
Per the U.S. securities regulator filing, Ayar Third Investment Company will purchase $1 billion in convertible preferred stock with the option to convert it into nearly 280 million shares.
The company plans to utilize the proceeds for corporate purposes, including capital expenditures and working capital. It expects capital spending of about $1.5 billion in 2024, including the launch of its Gravity SUV.
Lucid is currently struggling with lower-than-expected demand for EVs and a price war initiated by Tesla.
This is not the first time that the PIF has invested in Lucid. In the middle of 2023, the same PIF agreed to purchase nearly 266 million shares of LCID for nearly $1.8 billion. Since the announcement, the company’s shares have declined more than $4 per share.
Will the Latest Investment Help Lucid Bounce Back?
In 2023, Lucid produced only 8,428 vehicles, down from its guidance of more than 10,000 units. The automaker aims to produce nearly 9,000 vehicles in 2024, which is much below Wall Street’s estimate of 12,000 units.
Even after price reduction, LCID’s vehicles remain expensive for many Americans. Lucid Air Pure, Air Touring and Air Grand Touring have starting prices of $69,900, $77,900 and $109,900, respectively. Affordability concerns discouraged buyers and the automaker sold only 6,001 units in 2023.
Widening loss remains a concern for the company. In the fourth quarter of 2023, the automaker reported a net loss of $654 million, wider than the loss of $473 million reported in the corresponding quarter of 2022.
According to Peter Rawlinson, CEO of Lucid, the automaker is burning around $1 billion in cash per quarter.
The investment of $1 billion might not prove to be sufficient for a company that is currently burning the same amount per quarter.
The Zacks Consensus Estimate for MOD’s 2024 sales and earnings per share (EPS) suggests year-over-year growth of 4.3% and 67.7%, respectively. The EPS estimates for 2024 and 2025 have moved up by a penny each in the past 30 days.
The Zacks Consensus Estimate for TM’s 2024 sales and earnings suggests year-over-year growth of 10% and 73.6%, respectively. The EPS estimates for 2024 and 2025 have improved 86 cents and $1.01, respectively, in the past 30 days.
The Zacks Consensus Estimate for ALSN’s 2024 sales and earnings suggests year-over-year growth of 2.1% and 3.2%, respectively. The EPS estimates for 2024 and 2025 have improved 67 cents and 71 cents, respectively, in the past 30 days.
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Lucid (LCID) to Get $1B Investment From Saudi's PIF Affiliate
Lucid Group, Inc. (LCID - Free Report) is raising $1 billion in capital from Ayar Third Investment Company, an affiliate of Saudi Arabia’s Public Investment Fund (“PIF”).
The recent investment by a sovereign wealth fund offers Lucid a competitive advantage over other struggling electric vehicle (EV) startups.
In an effort to diversify the Kingdom's economy, the Saudi government has already made massive investments in Lucid, per Reuters. It holds 60% stakes in LCID.
Per the U.S. securities regulator filing, Ayar Third Investment Company will purchase $1 billion in convertible preferred stock with the option to convert it into nearly 280 million shares.
The company plans to utilize the proceeds for corporate purposes, including capital expenditures and working capital. It expects capital spending of about $1.5 billion in 2024, including the launch of its Gravity SUV.
Lucid is currently struggling with lower-than-expected demand for EVs and a price war initiated by Tesla.
This is not the first time that the PIF has invested in Lucid. In the middle of 2023, the same PIF agreed to purchase nearly 266 million shares of LCID for nearly $1.8 billion. Since the announcement, the company’s shares have declined more than $4 per share.
Will the Latest Investment Help Lucid Bounce Back?
In 2023, Lucid produced only 8,428 vehicles, down from its guidance of more than 10,000 units. The automaker aims to produce nearly 9,000 vehicles in 2024, which is much below Wall Street’s estimate of 12,000 units.
Even after price reduction, LCID’s vehicles remain expensive for many Americans. Lucid Air Pure, Air Touring and Air Grand Touring have starting prices of $69,900, $77,900 and $109,900, respectively. Affordability concerns discouraged buyers and the automaker sold only 6,001 units in 2023.
Widening loss remains a concern for the company. In the fourth quarter of 2023, the automaker reported a net loss of $654 million, wider than the loss of $473 million reported in the corresponding quarter of 2022.
According to Peter Rawlinson, CEO of Lucid, the automaker is burning around $1 billion in cash per quarter.
The investment of $1 billion might not prove to be sufficient for a company that is currently burning the same amount per quarter.
Zacks Rank & Key Picks
LCID currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Modine Manufacturing Company (MOD - Free Report) , Toyota Motor Corporation (TM - Free Report) and Allison Transmission Holdings, Inc. (ALSN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MOD’s 2024 sales and earnings per share (EPS) suggests year-over-year growth of 4.3% and 67.7%, respectively. The EPS estimates for 2024 and 2025 have moved up by a penny each in the past 30 days.
The Zacks Consensus Estimate for TM’s 2024 sales and earnings suggests year-over-year growth of 10% and 73.6%, respectively. The EPS estimates for 2024 and 2025 have improved 86 cents and $1.01, respectively, in the past 30 days.
The Zacks Consensus Estimate for ALSN’s 2024 sales and earnings suggests year-over-year growth of 2.1% and 3.2%, respectively. The EPS estimates for 2024 and 2025 have improved 67 cents and 71 cents, respectively, in the past 30 days.