Why Lucid Stock Is Up Double Digits This Week
Many growth and tech stocks surged this week with the Nasdaq Compound index up about 3%. Electric vehicle stocks have been hit harder than many other sectors and are rebounding faster this week. Lucid Group (LCID 7.04%) is an example. Its shares are up about 15%, according to data provided by S&P Global Market Intelligence, since last Friday’s close as the market heads into the final day of trading this week.
Lucid did not report any company-specific news this week, but it has recently been working to strengthen its financial position. The stock has fallen nearly 30% in the past three months, and investors now seem to have decided that the risk-reward balance has shifted in their favor.
Lucid was one of the first electric vehicle makers to announce price increases on its luxury electric cars in early May to offset rising material and supply chain costs. The company gave potential customers several weeks’ notice to reserve vehicles at previous prices before the increases take effect on June 1.
The price of an entry-level Air Pure sedan has jumped around $10,000 and is approaching $90,000 for the base model before any tax credits. In another move that may come as the company sees continued economic headwinds, it last week announced a new $1 billion revolving credit facility.
Lucid ended the first quarter with nearly $5.4 billion in cash on its balance sheet, which Chief Financial Officer Sherry House said should support its growth plans through 2023. The new facility provides capacity for additional five-year loan. While some economists predict a sharp economic slowdown and potential recession, Lucid appears to be taking the first steps to support itself if those predictions materialize. This appears to be a prudent move, and the stock appears to have found a recent low, prompting the jump this week.