84
Shares of Lucid Group came under heavy pressure on Tuesday after media reports fueled rumors that the company might file for bankruptcy or consider going private. The company categorically denied these claims, which helped the stock recover some of its losses before the close. During the session, Lucid (LCID) shares plummeted by more than 55% at the height of the sell-off before paring their losses to close down about 16% . The stock also hit an all-time low during trading.
The stock exchange also suspended trading of the stock several times due to sharp fluctuations, amid a strong sell-off that prompted investors to exit before any official comment was issued by the company.
The rumors came after a report published by a website specializing in electric vehicle news, which indicated that Lucid was considering options including restructuring, bankruptcy, or going private .
The company denies the rumors and confirms the availability of funds.
Lucid quickly issued an official statement denying the reports, describing them as “completely unfounded.” The company affirmed that it has sufficient liquidity to fund its operations until next year and that its board of directors has not formed any special committee to study restructuring or any similar alternatives. The company clarified that its financial position does not warrant such measures, indicating that it has ample financial resources to support its operational plans in the coming period.
Lucid had ended the first quarter of the year with about $700 million in cash , before successfully raising an additional $1 billion during April. It also still has nearly $2 billion in unused credit facilities, giving it additional financial flexibility to continue its business.
The real challenge remains achieving profitability.
Despite denying bankruptcy rumors, the company still faces significant challenges in achieving profitability, as analysts expect Lucid to continue consuming cash in the coming years.
Wall Street estimates that the company could burn through about $6.7 billion by 2028 , while it is not expected to achieve positive free cash flow before 2029 .
Achieving positive cash flows is one of the most important milestones for electric vehicle companies, as it means that the company is able to finance its operations and investments from its operating revenues without needing to raise additional funds.
Conversely, Lucid benefits from a significant advantage in its ownership structure, with Saudi government- linked entities holding the largest stake. These entities have provided consistent financial support throughout the company’s growth phases, giving investors a degree of confidence in the company’s ability to secure necessary funding should the need arise. Despite this support, analysts believe that the future of Lucid’s stock will remain contingent on the company’s ability to increase production and sales, reduce operating losses, and achieve profitability in the coming years, independent of rumors and short-term market fluctuations.
