24/7 Wall St. Insights

• Lucid Group Inc.’s (NASDAQ: LCID) CEO offered a weak defense for diluting the stock.
• It is no surprise the stock has plunged in the past two years.
• Also: Dividend legends to hold forever.

Lucid Group Inc. (NASDAQ: LCID) CEO Peter Rawlinson said no one understood why issuing a large amount of stock in exchange for $1.7 billion was an intelligent decision and that the market overreacted when the electric vehicle (EV) company sold hundreds of millions of shares. The decision caused considerable dilution and investor objections.

Rawlinson told CNBC that issuing 262.5 million shares was a strategic decision meant to fund the company’s future and support its current money-losing operation. “We’d signaled that we had a cash runway to Q4 next year,” he told the TV channel. (Incidentally, it also recently sold the Saudi Ayar Third Investment 374,717,927 shares of common stock in a private placement.)

Why doesn’t Rawlinson have any credibility on Wall Street? In the third quarter, the company produced only 1,805 vehicles and delivered 2,781 vehicles. That is such a modest number that it is hard to see how Lucid will make money.

The most obvious reason Lucid’s stock is down 81% in the past two years while the S&P 500 is 56% higher is its massive losses. In its most recently reported quarter, it had revenue of $200 million and a loss of $792 million. It is hard to make the case that it will get better.

Here Are the Odds Lucid Goes Bankrupt in the Next 5 Years

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