October turned out to be the worst month of 2024 so far for Lucid Group(NASDAQ: LCID), with the electric vehicle (EV) stock crashing 37.4%, according to data provided by S&P Global Market Intelligence.
Investors got a shock when Lucid announced plans to sell shares to raise money, even as its production and delivery numbers continued to disappoint. With Lucid just reporting a significantly large loss for the third quarter, the stock hit its 52-week low of $2.02 a share on Nov. 6. The only hope remaining now for Lucid, and its investors, is its Gravity SUV.
Lucid's cash needs are costing investors
In mid-October, Lucid announced plans to a little over 262 million shares to raise funds. It also announced an agreement to sell another 375 million shares to an affiliate of the Saudi Arabia's sovereign public fund, the Public Investment Fund (PIF). PIF is also the largest stakeholder in Lucid.
While Lucid expects to raise nearly $1.7 billion from the total share sale, investors were left wondering why Lucid felt the need to raise more funds barely two months after the PIF committed to a funding of $1.5 billion. Worse yet, the share dilution will significantly erode the wealth of Lucid's existing shareholders, which is the last thing investors in the languishing stock want.
Earlier in October, Lucid revealed it delivered 2,781 cars in the third quarter, up from 2,394 deliveries in Q2, but produced only 1,805 units. In Q2, it produced 2,110 vehicles.
What to know before buying Lucid stock
Lucid third-quarter numbers are out. The EV maker generated only $200 million in revenue during the quarter, but reported a net loss of nearly $993 million, up more than 50% year over year.
Lucid, however, reiterated its full-year production target of 9,000 units, confirmed the company is on track to start production of its Gravity SUV this year, and said its current cash balance after the recent capital raise is enough to fund operations and growth through 2026.
Lucid's future now depends a great deal on Gravity, a car the company has high expectations from. The company started taking orders for the Grand Touring trim of the Gravity SUV on Nov. 7, and expects to start production later this year. It further expects to launch the Gravity Touring trim late next year.
2025, therefore, will be an important year for Lucid when Gravity sales start showing up on its numbers. The company also expects its ongoing cost-reduction efforts to boost margins, which is another important number to watch out for in 2025. Until then, if the stock rebounds on events like the timely start of Gravity production, consider it a dead cat bounce.
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
