What happened
Lucid Group (LCID -2.86%) stock jumped almost 5% this morning on news of a potential expansion. The stock didn't hold on to those gains, however, and was higher by just 1.1% at 11 a.m. ET.
So what
The initial pop came after Reuters reported that the maker of luxury EV sedans is about to enter the large Chinese market. That Lucid wants to do business in China shouldn't be surprising. But that the move may be imminent caught investors off guard. That's because the company -- and its stock -- have been struggling recently.
Now what
Just over one week ago, Lucid announced plans to raise about $3 billion from a common stock offering and a private placement share sale. In its most recent quarterly earnings report, the company said its $4.1 billion in liquidity would allow it to fund operations for about one more year. So Lucid's plan to raise additional capital wasn't surprising. But it seems surprising that it would also be working to enter a new market rather than focusing on existing operations.
Lucid's head of China operations reportedly said today that the company is preparing to enter the Chinese market, and Reuters reported the company might also be looking at building a manufacturing plant there.
Since its public debut nearly two years ago, Lucid has been saying it plans to eventually expand into China. But the EV start-up produced only 7,180 vehicles last year and expects that to grow only to just over 10,000 in 2023. It would seem that the company should be concentrating on ramping up production and sales rather than working on expansion plans right now. That likely explains why the early gains gave up ground this morning.
