Why Lucid Stock Soared 21.5% Today

The Motley Fool · 1d ago

Key Points

  • Lucid's stock has shed more than 70% of its value over the past year.

  • Bargain-hunters are starting to take notice.

Shares of Lucid Group (NASDAQ: LCID) leaped on Tuesday after a notable investor disclosed a large position in the luxury automaker.

Lucid's logo is displayed on a building.

Image source: Getty Images.

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A royal vote of confidence

Prince Alwaleed bin Talal bin Abdulaziz al Saud, a member of the Saudi royal family, reported ownership of 19.5 million shares of Lucid on July 28. With Lucid's stock now trading near $7.90 per share, that stake is valued at over $154 million.

Prince Alwaleed has a net worth of approximately $23 billion, according to Forbes. He's often referred to as the "Arabian Warren Buffett" due to his impressive multi-decade investment track record.

Risks remain

News of Prince Alwaleed's investment comes at an opportune time. Lucid's stock price has shed nearly three-quarters of its value over the past year.

The electric vehicle (EV) maker is dealing with the loss of federal tax credits for EV purchases, which expired on Sept. 30.

Moreover, the automaker remains deeply unprofitable as it ramps up production. Lucid generated an operating loss of $989 million in the first quarter.

Still, investors are viewing Prince Alwaleed's stake in Lucid as a vote of confidence for the EV upstart, and many decided to buy alongside the billionaire.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.