Related media – Connected media
Peter Rawlinson, CEO of Lucid Motors, clarified investor reactions to the company’s recent public offering, which raised approximately $1.75 billion and resulted in the stock’s steepest decline in nearly three years. Speaking to CNBC, Rawlinson emphasized that the decision was a strategic move to ensure the electric vehicle manufacturer has adequate capital for its operations and growth initiatives.
The public offering involved nearly 262.5 million shares of common stock and was essential for maintaining liquidity, particularly as Lucid aims to avoid any “going concern” statements about its financial viability. “We had indicated that we would have a liquidity runway through the fourth quarter of next year,” Rawlinson explained from the company’s new offices in suburban Detroit. “As a Nasdaq-listed company, we must manage our financial outlook carefully.”
Despite Rawlinson’s assurances, Wall Street analysts reacted negatively, interpreting the timing of the offering as premature. Many questioned the necessity of raising funds given that Lucid had reported $5.16 billion in total liquidity at the end of the third quarter, including over $4 billion in cash and equivalents.
The timing was particularly scrutinized because it came just two months after Lucid secured a $1.5 billion investment from Saudi Arabia’s public investment fund. Morgan Stanley analyst Adam Jonas noted that the size and timing of the capital raise were unexpected.
RBC Capital Markets analyst Tom Narayan echoed these concerns, suggesting that investors might be puzzled by the need for additional capital shortly after the significant investment from the public investment fund, especially amid a downturn in share prices.
Rawlinson reaffirmed the company’s commitment to raising capital “opportunistically” and stated that the current funding would support operations until 2026, coinciding with the launch of a new mid-sized platform later this year. “This was planned and should not have been a surprise,” he remarked.
Following the announcement, Lucid’s stock dropped nearly 18%, marking its worst daily performance since December 2021. Rawlinson highlighted that the company is currently in a capital-intensive phase, focusing on expanding its Arizona facility, constructing a second factory in Saudi Arabia, launching the Gravity SUV, and developing its next-generation powertrain.
“We are making long-term investments across several areas,” Rawlinson said. “Cost management is crucial for each vehicle we produce.”
The announcement also detailed plans for the company’s majority shareholder, the Public Investment Fund (PIF), to purchase over 374.7 million shares to maintain its approximately 59% ownership stake in Lucid. This type of transaction, known as pro rata, allows existing investors to maintain their share of the company in future financing rounds, a practice the PIF has consistently engaged in with Lucid.
While individual investors may have been concerned about potential stock dilution, Rawlinson framed the PIF’s ongoing support as a positive indicator of confidence in the company. “I believe the reaction to this news was misinterpreted,” he stated. “If we hadn’t moved forward with the pro rata, it would suggest a loss of faith from the PIF.”
Lucid’s recent public offering was projected to raise about $1.67 billion, with a provision for underwriter BofA Securities to purchase an additional 39.37 million shares within 30 days.
Despite recent challenges, including higher operational costs and slower-than-anticipated demand for electric vehicles, Lucid reported record deliveries in 2024 of its flagship model, the all-electric Air. The company aims to produce 9,000 vehicles this year, with the Gravity SUV set to enter production later in the year.
However, the pace of sales and financial growth has not met earlier expectations, prompting the company to address marketing and outreach strategies to better engage potential customers.
Related media – Linked media