Lucid shares plunge 19% as electric car maker plans major share sale

Lucid shares fell sharply on Thursday after the electric vehicle maker said it plans a major public offering and forecast a bigger-than-expected loss in the third quarter.

Shares fell 15% to $2.80 in early trading Thursday. The S&P 500 and Dow Jones Industrial Average rose 0.4% and 0.3%, respectively.

The public offering will include 262 million shares, the company said late Wednesday. Proceeds will be used for capital expenditures, working capital and other things, Lucid said.

Saudi Arabia's Public Investment Fund, the majority shareholder, said it would buy 375 million shares in a private placement to retain a 59% stake in the company.

Newly issued shares reduce the percentage of the company owned by existing holders. A new issue may reduce the value of existing shares.

Investors, for the most part, know that Lucid needs to raise money. But the timing is never certain.

Lucid ended the second quarter with $4 billion in cash and investments on its balance sheet. Wall Street projects the company will burn about $2.3 billion over the next six quarters, according to FactSet.

The automaker has enough cash to operate through 2025 and beyond. However, as a practical matter, no company can wait until it has burned through most of its available cash before raising more.

At the latest price, Lucid would raise about $1.7 billion, which is about a year’s worth of cash at the current burn rate. Since going public in July 2021, Lucid has spent about $8.6 billion growing its business.

Along with the shareholder raise, Lucid pre-announced third-quarter numbers. Lucid estimates its operating loss to be in the range of $765 million to $790 million in the third quarter, more than the $752 million analysts expected, according to FactSet. The company plans to report full third-quarter earnings on Nov. 7.

Lucid expects revenue of $199 million to $200 million, compared with the consensus estimate of $196 million. Lucid delivered 2,781 vehicles in the third quarter, a record for the company.

Shares have fallen 22% this year through Thursday. The announcement comes as growth in demand for electric vehicles has slowed, putting pressure on shares of EV makers. Lucid, as well as rival automakers including Tesla, have cut prices in an attempt to boost demand.