Lucid Group, the luxury electric vehicle manufacturer majority-owned by Saudi Arabia’s Public Investment Fund (PIF), has announced plans to seek shareholder approval for a reverse stock split. This strategic financial maneuver is aimed at increasing the company’s per-share price to regain compliance with Nasdaq’s listing requirements.
Navigating Nasdaq Compliance
The move comes after Lucid’s stock price traded below the Nasdaq’s minimum bid price of $1.00 for 30 consecutive business days, putting the company at risk of being delisted from the major exchange. A reverse stock split is a corporate action where a company consolidates its existing shares into fewer, proportionally more valuable ones. While this increases the trading price per share, it does not fundamentally change the company’s overall market capitalization or an investor’s percentage stake.
The Proposal Details
Lucid will present the proposal to its shareholders for a vote at its annual meeting scheduled for September 21, 2024. The company is seeking authorization to implement a split at a ratio ranging from 1-for-5 to 1-for-15. The board of directors would then have the discretion to determine the final ratio and timing of the split if the proposal is approved. This action is designed to make the stock more attractive to a broader range of institutional investors and to ensure it remains on the Nasdaq exchange.
Strategic Importance for Saudi Arabia
This development is of significant interest to the MENA region, as Saudi Arabia’s PIF holds a majority stake of approximately 60% in Lucid. The fund’s investment is a cornerstone of the Kingdom’s Vision 2030 strategy to diversify its economy away from oil and into future-forward industries like sustainable technology and advanced manufacturing. Lucid also operates a manufacturing plant in King Abdullah Economic City (KAEC), its first international facility, which assembles Lucid Air vehicles for the local market and for export, further cementing its strategic importance to the Kingdom’s industrial ambitions.
Production and Financial Outlook
Despite the stock price pressure, Lucid is pushing forward with its production goals, aiming to manufacture 9,000 vehicles in 2024. The company is also preparing for the launch of its highly anticipated Gravity SUV, with production expected to commence in late 2024. The success of the Gravity is seen as a critical next step in the company’s growth trajectory. Financially, the company reported a net loss of $684.7 million in the first quarter of 2024, highlighting the capital-intensive nature of scaling an automotive brand.
About Lucid Group
Lucid Group is a US-based luxury electric vehicle company that aims to inspire the adoption of sustainable energy by creating advanced technologies and captivating luxury EVs centered around the human experience. The company’s first car, the Lucid Air, is a state-of-the-art luxury sedan with a California-inspired design. The company is heavily backed by Saudi Arabia’s Public Investment Fund and operates a manufacturing facility in the Kingdom.
Looking Ahead
Securing shareholder approval for the reverse stock split is the immediate next step for Lucid’s management. For its primary backer, the PIF, the successful execution of this financial strategy is crucial to protecting its landmark investment and ensuring the long-term viability of a key component in its portfolio. The market will be closely watching how this move, combined with the upcoming launch of the Gravity SUV, impacts the company’s stability and future growth prospects.
Source: AGBI
