What happened
Many growth and tech stocks have jumped this week with the Nasdaq Composite index up about 3%. Electric vehicle stocks had been hit harder than many other sectors, and are bouncing back faster this week. Lucid Group (LCID 0.41%) is an example. Its shares are up about 15% according to data provided by S&P Global Market Intelligence, since last Friday's closing price as the market heads into this week's final trading day.
So what
Lucid didn't report any company-specific news this week, but it has recently worked to bolster its financial position. The stock has dropped nearly 30% over the past three months, and investors seem to have now decided the risk-reward balance has shifted in their favor.
Image source: Lucid Group.
Now what
Lucid was one of the first EV makers to announce price increases in early May on its luxury electric cars to offset rising material and supply chain-related costs. The company gave potential customers several weeks notice to reserve vehicles at the previous prices before increases took effect on June 1.
The price of an entry-level Air Pure sedan jumped by about $10,000 and is approaching $90,000 for the base model before any tax credits. In another move that perhaps comes from the company seeing continued economic headwinds, it announced a new $1 billion revolving credit facility last week.
Lucid ended the first quarter with almost $5.4 billion in cash on its balance sheet, which CFO Sherry House said should support its growth plans well into 2023. The new facility provides another five years of borrowing capacity. With some economists forecasting a sharp economic slowdown and potential recession, Lucid seems to be taking an early step to support itself should those predictions materialize. That seems like a prudent move, and the stock appears to have found a recent bottom, causing the jump this week.
