Peter Rawlinson, CEO of Lucid Motors, clarified investor reactions to the company's recent public offering, which raised about $1.75 billion and resulted in the stock's steepest decline in nearly three years. Speaking to CNBC, Rawlinson stressed that the decision was a strategic move to ensure the electric vehicle maker has adequate capital for its operations and growth initiatives.
The public offering involved nearly 262.5 million shares of common stock and was essential to maintaining liquidity, particularly as Lucid aims to avoid any “going concern” declarations about its financial viability. “We had indicated that we would have a liquidity pathway until the fourth quarter of next year,” Rawlinson explained from the company's new offices in suburban Detroit. “As a Nasdaq-listed company, we must carefully manage our financial outlook.”
Despite Rawlinson's assurances, Wall Street analysts reacted negatively, interpreting the timing of the offer as premature. Many questioned the need to raise funds given that Lucid reported $5.16 billion in total liquidity at the end of the third quarter, including more than $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 may be perplexed by the need for additional capital soon after the significant investment by the public investment fund, especially in an environment of falling prices of actions.
Rawlinson reaffirmed the company's commitment to raising capital “opportunistically” and said the current funding will support operations until 2026, coinciding with the launch of a new mid-sized platform later this year. “This was expected and should not have been a surprise,” he noted.
Following the announcement, Lucid shares fell 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 facility in Arizona, building a second factory in Saudi Arabia, launching the Gravity SUV and developing its next-generation powertrain.
“We are making long-term investments in several areas,” Rawlinson said. “Cost management is critical for every vehicle we produce.”
The announcement also details plans for the company's majority shareholder, the Public Investment Fund (PIF), to purchase more than 374.7 million shares to maintain its ownership stake of approximately 59%. in Lucid. This type of transaction, known as pro rata, allows existing investors to keep their stake in the company in future funding rounds, a practice PIF has consistently undertaken with Lucid.
While individual investors may have been concerned about potential dilution in the shares, Rawlinson characterized PIF's continued support as a positive indicator of confidence in the company. “I think the reaction to this news has been misinterpreted,” he said. “If we had not moved forward with the pro rata, it would suggest a loss of confidence on the part of the PIF.”
Lucid's recent public offering is expected to raise approximately $1.67 billion, with an provision for underwriter BofA Securities to purchase an additional 39.37 million shares within 30 days.
Despite recent challenges, including higher operating costs and slower-than-expected 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 going into production later in the year.
However, the pace of sales and financial growth has not met previous expectations, prompting the company to address marketing and outreach strategies to better engage potential customers.