Why Lucid Stock Jumped 10% in July
Key Points
Lucid's CEO said rumors that the company was considering bankruptcy protection or going private were false.
A member of the Saudi royal family purchased a 5% stake in Lucid.
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Shares of the electric vehicle company Lucid Group (NASDAQ: LCID) rose last month after the company denied rumors that it was considering filing for bankruptcy protection or going private.
Lucid stock also gained significant momentum toward the end of July after an SEC filing showed that Prince Al Waleed bin Talal Al Saud, a member of the Saudi royal family, bought 19.5 million shares of the company in mid-July.
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Investors were clearly happy with both pieces of news, and Lucid stock gained 10.3% last month, according to data from S&P Global Market Intelligence.
Image source: Lucid Group.
A strong rebound after a very rough start
July started pretty rough for Lucid after an EV blog published an article saying Lucid was considering filing for bankruptcy protection or going private. Lucid's management quickly denied the rumor, with CEO Silvio Napoli released a statement saying,
"Lucid is not considering bankruptcy or a transaction to take the company private. Those reports are false. The Board did not explore either scenario. Period."
He added later in the statement that, "Lucid has sufficient liquidity to fund its operations well into next year."
Investors were obviously happy with Napoli's statement, and they received more good news when an SEC filing showed that Prince Al Waleed bin Talal Al Saud bought an additional 19.5 million shares of Lucid during the month, equivalent to about a 5% stake in the company. The Saudi Arabian Public Investment Fund (PIF) owns an estimated 60% of Lucid.
With Lucid putting shareholders' fears to rest and the company benefiting from a large purchase of shares from a key investor, investors boosted Lucid's stock in July.
Lucid's stock slid following second-quarter results
Lucid reported its second-quarter results (which ended June 30) in the first week of August, and investors were enthused with what they saw. Revenue rose 56% from the year-ago quarter to $405 million but was below Wall Street's consensus estimate of $416 million.
Lucid's $3.30 loss per share also missed the average analyst estimate of $2.46 per share.
Lucid's management also announced an "operational reset" for the company, identifying $1.4 billion in cash-flow improvement opportunities, advancing its Robotaxi technology, completing its AMP-2 factory in Saudi Arabia, and launching its upcoming midsize models.
What's clear right now is that the company certainly has its work cut out for it, and with its share price plunging 69% over the past 12 months, many investors have lost faith that Lucid can turn things around.
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Chris Neiger 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.
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