Lucid (NASDAQ:LCID) continues to receive support from Public Investment Fund (PIF) affiliate Ayar Third Investment Company, as the electric vehicle (EV) company announced this morning that the firm had agreed to provide it with $1.5 billion of capital. Lucid also reported its second-quarter earnings.
$750 million of the $1.5 billion will be in the form of convertible preferred stock, while the remaining $750 million consists of an unsecured delayed draw term loan facility. As a result of the funding, Lucid expects to have sufficient liquidity until at least the fourth quarter of 2025. Ayar is already Lucid’s largest shareholder.
The investment caught the attention of Cantor Fitzgerald, who upgraded LCID stock to “neutral” from “underweight” while reiterating its price target of $4. Let’s get into the details.
Cantor Fitzgerald Upgrades LCID Stock to “Neutral” From “Underweight”
Cantor applauded the Ayar investment, noting that it extended Lucid’s cash runway by two quarters. Lucid ended the second quarter with $4.28 billion in total liquidity.
The investment also conveys Ayar’s continuing support of the company. Cantor’s price target implies an upside of nearly 30% from current prices.
Cantor is more bullish on LCID stock than the average Wall Street analyst. LCID carries an average price target of $3.06, which is pretty much where it currently trades. The lowest price target sits at $1.75, while the highest is $4.
At the same time, Ayar’s investment poses the question of how much support the sovereign wealth fund is willing to provide Lucid with. Earlier this year, Lucid CEO Peter Rawlinson admitted that an over-reliance on PIF and Ayar could create a dangerous scenario.
“If I adopt a mindset that there is bottomless wealth from PIF, that is very dangerous, that is something I will never do, I respect them far too much for that,” said the CEO.
During the second quarter, Lucid produced 2,110 vehicles and delivered 2,394 of them. It’s only vehicle on the market is the Air, although it comes in several variations. The company reiterated its 2024 production guidance for 9,000 vehicles, with production of the Gravity SUV set to begin during the fourth quarter.
On the date of publication, Eddie Pan 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
