What happened
Stocks are being led lower by technology names today as the Nasdaq Composite index steadily dropped throughout the session. By 3:05 p.m. ET, the decline for the tech-heavy Nasdaq was approaching 1%.
But shares of electric-vehicle (EV) maker Lucid Group (LCID 0.83%) slid much faster. By that same time, Lucid stock was down 7.3% after reports of upcoming layoffs at the EV start-up.
So what
That plunge was initiated by a report that Lucid is going to lay off about 1,300 employees. Lucid produced 7,180 luxury electric sedans last year and had about 7,200 employees as of Dec. 31, 2023.
Reuters cited the report, which was based on an internal company memo, saying that Lucid now plans to cut 18% of that workforce, or about 1,300 workers. Many investors aren't waiting for confirmation from the company and are selling the stock.
Now what
Lucid ended 2022 with about $4.9 billion in total liquidity, but the company reported a diluted net loss attributable to common stockholders of nearly $2.6 billion for the full year. So it shouldn't come as a surprise that management is looking to cut costs.
Image source: Lucid Group.
Reuters indicated that the company will communicate more detail regarding the large layoff over the next few days. The big question for investors will be whether the company has added efficiencies enabling it to grow production without these jobs, or if manufacturing projections will be lowered.
Lucid has told investors it expects to manufacture 10,000 to 14,000 EVs in 2023. Some investors aren't waiting to hear whether that estimate changes based on today's reports
If it does, the stock will have further to fall. But owners of this aggressive growth stock should expect a highly volatile stock price as the company works to achieve positive cash flow from its operations.
