Lucid rejects bankruptcy report after volatile stock selloff
Lucid said rumors it is weighing bankruptcy or going private are false after its shares plunged and trading was repeatedly halted.
By Sofia Marchetti · World Affairs Correspondent
3 min read
Lucid Group denied that it is considering bankruptcy protection or a move to go private after a report about those options helped trigger a sharp selloff in its stock Tuesday. CNBC reported that Lucid shares fell more than 40% at one point and were paused several times for volatility.
The electric-vehicle company pushed back after EV, a website covering the sector, reported that Lucid had asked AlixPartners to assess potential paths including Chapter 11 protection or going private. EV reported that the adviser was expected to present findings to Lucid’s board before its next meeting.
Lucid said the report was wrong. “The rumors are completely false,” the company said in a statement cited by CNBC.
Lucid said its latest quarterly filings show it has enough cash to fund operations well into next year. The company also said it had not created a special board committee to review the scenarios described in the EV report.
“Our focus is on improving execution, strengthening operations, and positioning Lucid to realize the full potential of its technology, products, and innovation,” Lucid said in the statement. The company said AlixPartners is helping with that work and “nothing else,” and said the firm has not advised management or the board to pursue bankruptcy.
AlixPartners declined to comment on the report, according to CNBC.
EV also reported that AlixPartners had urged Lucid’s board to pursue more restructuring in the U.S. and Europe and put greater emphasis on the Gravity SUV. Lucid’s statement disputed the bankruptcy and going-private claims and described AlixPartners’ role as focused on operations.
Pressure on the EV maker
Lucid has been under strain as the electric-vehicle market has cooled from earlier expectations. CNBC reported that the company is dealing with slower EV adoption and regulatory changes under the Trump administration, including the end of a $7,500 federal incentive for EV buyers.
The company, backed heavily by Saudi Arabia’s Public Investment Fund, said last month that it would cut 18% of its U.S. workforce as part of a cost-reduction effort, according to CNBC. Earlier this month, Lucid also missed Wall Street expectations for second-quarter deliveries.
Lucid’s leadership has been changing as it tries to address those pressures. CNBC reported that Chief Executive Silvio Napoli announced a management shake-up earlier this month to simplify the company’s structure.
In May, Lucid suspended its production guidance, CNBC reported. Napoli said at the time that he was reviewing business decisions and that the company needed to reduce what he called elevated vehicle inventory.
Tuesday’s trading showed how sensitive Lucid’s shares remain to concerns about its financing and operating outlook. The company’s response sought to separate its work with AlixPartners from the restructuring scenarios described by EV while reaffirming that it expects to keep operating with its current liquidity into next year.
This story draws on original reporting from CNBC.