Why Lucid (LCID) Shares Are Falling Today

What Happened?

Shares of luxury electric car manufacturer Lucid (NASDAQ:LCID) fell 19.5% in the morning session after the company announced an underwritten public offering of roughly 262 million shares of its common stock. Separately, majority stockholder Ayar Third Investment Company, an affiliate of Saudi Arabia's Public Investment Fund, agreed to buy 375 million shares of common stock from Lucid in a private placement. Following the deal, Ayar is expected to maintain approximately 58.8% ownership of Lucid's common stock. 

Overall, Lucid is expected to raise gross proceeds of $1.67 billion from the offerings. The offering is likely to have a negative impact on its stock price as the newly issued shares dilute the ownership of existing shareholders. 

Separately, the company provided preliminary operating loss guidance of $765 million and $790 million for the third quarter, below analysts' expectations.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lucid? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Lucid’s shares are extremely volatile and have had 55 moves greater than 5% over the last year. But moves this big are rare even for Lucid and indicate this news significantly impacted the market’s perception of the business.

Lucid is down 34.5% since the beginning of the year, and at $2.72 per share, it is trading 47.1% below its 52-week high of $5.14 from December 2023. Investors who bought $1,000 worth of Lucid’s shares at the IPO in September 2020 would now be looking at an investment worth $275.03.

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