Lucid (NASDAQ:LCID) rose 5% overnight after its investors in Saudi Arabia led $1.5 billion in new funding. Saudi Arabia’s Public Investment Fund bought almost 86 million new shares of LCID stock in a private offering at a little over $10 per share, about $900 million. Another $600 million came in a secondary public offering.
Lucid opened Dec. 20 at $7.60 with a market capitalization of about $12.8 billion. A year ago, the stock was selling for about $42 per share.
Cash Is King
Lucid reported $3.3 billion of cash and short-term investments at the end of September. But it had negative operating cash flow of $569 million during the quarter.
The electric vehicle (EV) maker had revenue of about $195 million in the third quarter and delivered 1,398 cars. But it had reservations for 34,000 vehicles in November worth $3.2 billion, plus an order for 100,000 more from the Saudi Arabian government.
Lucid is expected to need $4.7 billion of cash to operate through 2024. The capital raise means it can now fulfill those orders.
Its Lucid Air sedan, which costs about $90,000, has gotten strong reviews for power and battery range. The car can get from zero to 60 miles per hour in just 2.6 seconds or deliver 516 miles of range between charges.
Saudi Arabia’s government has been a key backer for Lucid, run by former Tesla (NASDAQ:TSLA) chief engineer Peter Rawlinson. While the company has operations in Casa Grande, Arizona, it has promised to build a second plant in the country, capable of making 150,000 vehicles per year.
Before the capital raise, TV analyst Jim Cramer was calling Lucid “too dangerous” to own. There are just eight analysts for Lucid at TipRanks, equally divided between three buyers and three sellers with two on the fence.
What Happens Next for LCID Stock?
Lucid now has cash, orders and a factory. It needs to turn all that straw into gold. Its problems are similar to those of Tesla five years ago. It needs to scale production and turn a profit for its backers.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.