Is Lucid A Buy Following Fund Infusion? Here's How Much $1,000 Invested In EV Maker Will Be Worth If It Returns To November 2021 Peak

Shares of luxury electric vehicle maker Lucid Group Inc. LCID, which once traded as high as $57.55 post the Special Purpose Acquisition Company, or SPAC, deal, are now down to high-single-digit levels.

Lucid Stock Stutters: Lucid went public through a SPAC deal in July 2021. Following the first deliveries of its Air luxury sedan and amid the broader market strength, the stock embarked on a rally in late 2021, hitting a peak of $57.55 on Nov. 17. Since then, the stock has pulled back notably due to market-wide, sector-specific and company-specific factors.

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As is the case with all startups, Lucid had teething troubles, moving from a pre-revenue company to a commercial venture. The capital-intensive nature of the industry as well as the supply-chain challenges and higher input costs, aggravated by geopolitical factors, compounded Lucid's woes.

Stung by rising costs, the company announced price hikes for its vehicles, effective June 1. The base trim's prices went up by as much as 13% with the upward price adjustment, pushing it further out of price-sensitive consumer's reach.

Lucid slashed its production guidance by half on Aug. 7, with the new guidance modeling output of 6,000-7,000 units. The company’s third-quarter earnings report released in early November revealed that reservations for its Air sedan fell from 37,000 in the second quarter to 34,000.

Weighed down by these headwinds, the stock cratered to an all-time low of $7.05 on Monday before rebounding on Tuesday.

A Ray Of Hope? Lucid announced late on Monday that it has completed a previously announced equity offering, raising about $1.5 billion. Reacting to the development, the stock rallied as much as 9.1% on Tuesday before settling the session up 1.11%, at $7.23.

About $915 million of the proceeds came from a private sale of 86 million shares to an affiliate of Saudi Arabia’s Public Investment Fund, which happens to be its largest shareholder.

The company is pursuing an ambitious international expansion. It has a done-deal to supply 100,000 cars to the Saudi government over a 10-year period. It plans to construct its first overseas manufacturing plant in Saudi Arabia.

On the flip side, Lucid is extremely sensitive to economic vagaries, given the positioning of its vehicles in the premium segment. If Lucid manages to overcome the current challenges, its stock could take a turn for the better.

A $1,000 invested in Lucid shares at Tuesday’s closing price of $7.23 will fetch 138.3 shares. This would be worth $7,960 at the post-SPAC high of $57.55, returning a staggering 595%.

Price Action: In premarket trading, Lucid shares were up 1.80%, to $7.36, according to Benzinga Pro data.

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