Analyst Sets New Lucid Stock Price Target Following Earnings Report and Fund Investment
On August 5, Lucid Motors, a prominent player in the electric vehicle (EV) market, announced its second-quarter financial results and revealed a significant capital injection as it gears up for the launch of its highly anticipated Gravity SUV. CEO Peter Rawlinson emphasized the company’s recent achievements, noting, “We’re on the back of a second successive quarter of record deliveries.” Specifically, Lucid delivered nearly 2,400 cars, outperforming its core competitors, including renowned German automotive brands. This strong performance is bolstered by continued robust orders throughout the current quarter, reflecting sustained demand for Lucid’s innovative EVs.
Earlier in February, Lucid introduced a series of price reductions across its EV lineup, marking the company’s third price cut within seven months. Additionally, Lucid offered up to $1,000 for customers to purchase charging equipment. Rawlinson explained the rationale behind these moves, stating, “We’ve been able to introduce progressively more affordable versions of our cars. Our car now starts at $69,900 with the Air Pure, which is the most energy-efficient car in the world. We’re debunking the myth that our cars are unaffordable.” This strategy aims to make Lucid’s advanced electric vehicles more accessible to a broader range of consumers, thereby expanding its market reach.
Rawlinson, who previously served as vice president and chief vehicle engineer of the Tesla Model S, underscored that Lucid’s profitability depends on achieving scale. “This is all about scale,” he asserted. “We’re growing our order book for Lucid Air, we’re about to launch our SUV, the Lucid Gravity, which will have a massively more significant Total Addressable Market (TAM), and we’re already well on the way in our engineering of our mid-size platform.” The upcoming launch of the Lucid Gravity SUV is anticipated to open new market opportunities and significantly expand the company’s customer base.
In a crucial financial development, Saudi Arabia’s Public Investment Fund (PIF), Lucid’s largest shareholder, announced it would invest up to $1.5 billion into the company. This substantial cash infusion, coming just before the planned production of the Gravity SUV later this year, ensures that Lucid remains sufficiently funded until the fourth quarter of 2025. Rawlinson highlighted the strategic importance of this partnership, saying, “It is nice on days like this, with uncertainty in the markets, that it shows the value of having a long-term strategic partner in the PIF. That’s what truly differentiates Lucid as a company. We’ve got a long-term strategic partnership, which transcends a mere financial investment.”
Lucid plays a pivotal role in Saudi Arabia’s Vision 2030, a government initiative aimed at diversifying the nation’s economy, socially and culturally. Part of the PIF funds will be used to build a factory in Saudi Arabia, with an annual capacity of 150,000 vehicles per year. The company also rolled out a prototype of the Gravity SUV on July 31. Ayar Third Investment, another PIF affiliate, has agreed to purchase $750 million worth of convertible preferred stock and provide a similar amount as a credit line, marking the second investment from the PIF affiliate this year. This $1.5 billion capital raise extends Lucid’s cash runway into the fourth quarter of 2025.
Lucid’s second-quarter financial results showed a loss of 29 cents per share, an improvement from a 38-cent per share loss a year ago but still below Wall Street’s expectation of a 26-cent per share loss. Revenue for the quarter totaled $200.6 million, up from $150.8 million a year ago, surpassing consensus expectations of $192 million in sales. In response to the capital raise, Cantor Fitzgerald upgraded Lucid Group to neutral from underweight, maintaining an unchanged price target of $4. Lucid shares saw an increase of 11% in premarket trading and 3% to $3.08 at the last check.
Andres Sheppard, senior equity analyst at Cantor Fitzgerald, noted that the capital raise solidifies the relationship between PIF and Lucid, addressing investor concerns that PIF might withdraw support if frustrated with the company’s progress. The PIF is among the largest sovereign wealth funds globally, with estimated assets of roughly $925 billion. Established in 1971 to invest on behalf of the Saudi Arabian government, the fund is controlled by Crown Prince Mohammed bin Salman.
The PIF’s investment history includes a $1 billion investment in an investment fund established by former Trump Administration Treasury Secretary Steven Mnuchin in 2021 and a $2 billion investment in a private equity firm formed by Jared Kushner, Donald Trump’s son-in-law, the same year. More recently, PIF disclosed significant stakes in major U.S. companies, including a $713.7 million stake in Boeing, around $522 million in Citigroup, a $522 million stake in Meta Platforms’ Facebook, a $495.8 million stake in Disney, and a $487.6 million stake in Bank of America, according to a Securities and Exchange Commission filing.
Additionally, Golf Saudi, a division of the PIF, funded LIV Golf Investments, which established some of the richest golf tournaments in history, attracting star players to participate.
Lucid’s recent developments, particularly the significant cash infusion from PIF and the upcoming launch of the Gravity SUV, position the company for potential growth and market recovery amidst ongoing challenges in the electric vehicle industry. The company’s focus on scaling production, reducing vehicle prices, and securing long-term financial partnerships underscores its strategic approach to becoming a major player in the rapidly evolving EV market.
