What happened
Lucid Group (LCID -2.86%) reports its fourth-quarter and full-year 2021 financial update after the market closes today. Shares are popping ahead of that report, but there's another reason for that. As of 12:34 p.m. ET on Monday, Lucid shares had jumped 6.8% on the day.
So what
The pop in the stock comes after Bloomberg reported that Lucid has signed an agreement to build a new factory in Saudi Arabia, its first outside the U.S. The report says Lucid signed a 25-year, $30 million lease agreement to build a manufacturing plant on the Saudi Arabian west coast. Expansion plans are one of the things investors are looking forward to hearing from Lucid's update today, so the report is welcome news.
The Lucid Air. Image source: Lucid Group.
Now what
The company has previously said it expects to enter the European and Middle East markets beginning in the first half of 2022 and then into China in 2023. A move into Saudi Arabia isn't entirely unexpected; the country's sovereign wealth fund invested more than $1 billion in Lucid in 2018, helping to finance Lucid's existing factory in Arizona. The fund is a large shareholder in Lucid, with an approximately 62% stake in the company.
Investors have already priced growth into Lucid stock. Even after shares have dropped 26% so far in 2022, the company is valued with a market cap of about $46 billion. But the report of its first expansion outside the U.S. is helping investors believe that growth will be coming.
Lucid will also have to satisfy investors with its progress on deliveries of its electric Air sedan when it reports later today. In its third quarter 2021 report, the company said it expects to produce 20,000 vehicles in 2022. The stock could reverse course if the company backs off of those expectations later today. But good news on production and further expansion will likely move it even higher.
