Lucid Stock Bounces Back After Strongly Refuting Bankruptcy Rumors

Lucid (NASDAQ:LCID) stock was surging this morning, trading 20% higher as of Wednesday noon, after the company categorically denied reports that it was filing for bankruptcy.

For a few chaotic hours on Tuesday, shares of the electric vehicle (EV) maker cratered more than 55%, triggering multiple volatility trading halts as panic struck investors.

After all, an exclusive report from EV news publication, electric-vehicles.com, claimed “sources” to have stated that Lucid had asked AlixPartners to deliver its findings on two options: go private or file for a Chapter 11 bankruptcy.

Image source: Getty Images.

AlixPartners isn’t doing what the markets think

Lucid slammed the report as “completely false”, clarifying that it hadn’t set up any special board committee to explore the two options.

The rumor mill's roots can be traced to a recent CarBuzz report claiming that Lucid has retained the world’s largest turnaround consultancy firm, AlixPartners.

Lucid has indeed retained AlixPartners, as the company just confirmed, but only to help the EV maker improve execution, strengthen operations, and realize its full potential in products, technology, and innovation.

Lucid has set the record straight: AlixPartners is not involved in anything else and has not recommended bankruptcy to the company’s management or board.

Why the market panicked, and Lucid stock crashed

Lucid investors were quick to hit the sell button following the report, but it’s hard to blame them.

AlixPartners is one of the world’s largest turnaround and restructuring consulting companies, and Lucid is navigating a rough patch.

Lucid appointed Silvio Napoli as its new CEO on June 1, who has since initiated significant operational and organizational changes.

In Late June, Lucid announced that it was laying off 18% of its U.S. workforce, which could save the company $158 million in annualized costs.

The EV maker had already suspended its 2026 production guidance of 25,000-27,000 vehicles in May as Napoli was conducting a business review. Management explicitly stated that the near-term conditions were “uneven” and that the company would adjust production accordingly.

These updates kept piling on investors who were already trying to digest poor delivery numbers, a massive capital raise, and a temporary halt to Lucid’s Gravity SUV line due to a supplier quality issue.

What should you do with Lucid stock now?

Here’s something that may shock you: The rumor about Lucid going private or filing for bankruptcy isn’t new.

During its Q1 earnings call in May, an analyst asked Lucid management how it plans to address “concerns about bankruptcy or potential take-private scenario.”

Marc Winterhoff, then serving as interim CEO before stepping back to the Chief Operating Officer role on June 1, replied that while management won’t speculate on rumors, restoring investor confidence is a priority. He insisted Lucid is moving into a phase where it could leverage recent investments to boost its operations and financials.

Of course, in a classic twist, Winterhoff exited Lucid within a few weeks, but that’s a story for another day.

While it is still uncertain how Lucid plans to boost sales and margins amid the ongoing challenges, including a global EV slowdown, the company does have cash. It ended Q1 with $700 million in cash and raised $1.05 billion in April.

That is perhaps why Lucid could aggressively shoot down bankruptcy reports, stating that it has “sufficient liquidity to carry its operations well into next year.”

For Lucid, the roller-coaster ride should serve as a stark reminder that the market’s patience is wearing out, and it must turn around quickly. For investors, it’s strictly a wait-and-watch, as Lucid is still on borrowed time and its Saudi majority investor’s lifeline.

Neha Chamaria 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.