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Lucid (NASDAQ:LCID) Files for an Additional $8B Offering
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Lucid (NASDAQ:LCID) Files for an Additional $8B Offering

Story Highlights

Lucid has proposed raising an additional $8 billion in funding. If efficiently managed, the electric vehicle maker will be able to swiftly pass through the current headwinds of the supply chain and the rising cost of inputs.

American electric vehicle (EV) maker Lucid Group (LCID) filed a Form S-3 with the Securities and Exchange Commission (SEC) for the additional offering of securities worth up to $8 billion.

Lucid hasn’t specifically mentioned which type of securities it will issue in the future. The company did note that the additional issue could include “common stock, preferred stock (including in the form of depositary shares), warrants, debt securities (including convertible debt), purchase contracts, and/or units (which are typically a combination of two or more types of securities).”

Furthermore, the company noted that it will describe the type and nature of the offering via a prospectus supplement at the time of issuing the additional securities.

Although the company hasn’t mentioned the reason for the additional offering, a Reuters report suggests that the company will use the proceeds toward the working capital requirement. Most EV makers are facing part shortages owing to supply chain bottlenecks and rising costs of input materials.

In its second quarter Fiscal 2022 results, Lucid posted mixed results, beating earnings but missing revenue expectations. Moreover, the company upset investors with a 50% production cut for the full year of Fiscal 2022. At the time, Lucid’s CEO Peter Rawlinson blamed supply chain snarls and logistics challenges as the primary issues for the drag in production volume.

Is Lucid a Buy, Sell or Hold?

Lucid’s first EV, the Lucid Air, has won customers’ support. Lucid has seen the demand for Lucid Air rise manifold this year. However, the company is unable to meet the growing demand due to supply issues. This has made analysts cautiously optimistic about the stock.

On TipRanks, LCID stock has a Moderate Buy consensus rating based on one Buy versus one Hold rating in the past three months. The average Lucid Group price forecast of $23 implies 42.2% upside potential to current levels. Meanwhile, the stock has lost a whopping 60.5% so far this year.

Moreover, even retail investors are fleeing the stock. TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Negative on Lucid Group, with 1.9% of portfolios tracked by TipRanks decreasing their exposure to LCID stock over the past 30 days.

Parting Thoughts

Lucid is struggling to keep its production plans on schedule due to supply chain issues. Raising additional capital will surely provide the necessary cushion to ramp up production by efficiently managing the logistics line. Notably, the EV industry is poised for exponential growth in the future. Though short-term headwinds put LCID stock in a spot, its long-term potential and performance will surely bring the limelight back to the company.

Disclosure

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