Lucid Group, the electric vehicle startup, experienced a significant drop in its stock price following the announcement of a public offering. The company plans to issue nearly 262.5 million shares of its common stock. This news led to a decline of more than 10% in after-hours trading.
Key Details
- Public Offering: Lucid aims to use the proceeds for “general corporate purposes,” which could include capital expenditures and working capital.
- Private Placement: In conjunction with the public offering, Lucid’s majority stockholder, Ayar Third Investment Co., an affiliate of Saudi Arabia’s Public Investment Fund, will purchase over 374.7 million shares in a private placement.
- Ownership: Post-transaction, Ayar is expected to maintain its 58.8% ownership of Lucid’s outstanding shares.
- Underwriter: BofA Securities is the sole underwriter for the public offering, with an option to purchase an additional 39.37 million shares.
Financial Context
Lucid recently reported cash and cash equivalents of $1.35 billion at the end of the second quarter. However, the company has faced challenges, including higher costs and slower-than-expected demand, impacting its sales performance. Despite these issues, Lucid continues to seek new investments, highlighted by a recent $1.5 billion cash infusion agreement with the PIF.
Market Impact
Lucid’s stock has declined 22% this year, closing at $3.28 per share on Wednesday. The company’s market capitalization stands at $7.6 billion, with 2.32 billion shares outstanding.
Lucid’s strategic moves indicate a focus on expanding its product line and addressing financial challenges, but investor confidence appears to have been shaken by the recent announcements.
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