On Tuesday, Lucid Group Inc. (NASDAQ:LCID) stock received an upgrade from Underweight to Neutral by Cantor Fitzgerald, with a price target set at $4.00.
The revision follows Lucid's recent announcement on Monday concerning a new capital raise agreement with Ayar Third Investment Company, an affiliate of the Public Investment Fund (PIF), Lucid's majority shareholder.
The capital infusion of up to $1.5 billion is expected to extend Lucid's financial runway into the fourth quarter of 2025. This is an improvement from the previous estimate, which projected the runway to last until the second quarter of 2025.
The arrangement includes a $750 million investment in convertible preferred stock through a private placement, coupled with a $750 million unsecured delayed draw term loan facility. Lucid has indicated that there are no immediate plans to draw down on the loan facility.
The company plans to allocate the net proceeds from this capital raise towards general corporate purposes. These may encompass capital expenditures and working capital, as outlined by Lucid's management. The investment by PIF is seen as a significant move that not only extends the financial horizon for Lucid but also reaffirms PIF's long-term commitment to the electric vehicle manufacturer.
Cantor Fitzgerald's upgrade reflects the analyst's view that the recent capital raise substantially bolsters Lucid's financial stability. This development is crucial for Lucid as it navigates the competitive and capital-intensive electric vehicle market. The new price target of $4.00 is indicative of the revised outlook on Lucid's stock by the firm.
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