Shares of electric vehicle (EV) maker Lucid Group (LCID 1.17%) were popping Tuesday morning after the company released its second-quarter update last night. Revenue beat expectations, but there was an even bigger driver for Lucid shares. After jumping as much as 13.5%, Lucid stock was trading higher by 2.5% as of 10:50 a.m. ET.
Investors have been losing confidence that the company would have enough capital to survive long enough to begin selling its Gravity SUV next year. The stock has been cut in half over the past 12 months. But Lucid announced a major cash infusion last night that has allayed some of investors' concerns with the company's future.
Lucid gets a $1.5 billion boost
The first bit of good news was the company generated more revenue than Wall Street expected. Lucid reported revenue of $200 million while analysts expected sales of about $186 million, according to Bloomberg. That means the nearly 2,400 vehicles it delivered in the second quarter sold for higher prices than expected. But Lucid also lost more money on those sales than Wall Street predicted.
The bigger news was that an affiliate of the Saudi Arabian Public Investment Fund (PIF) has agreed to provide a $750 million loan facility for Lucid as well as invest another $750 million for convertible preferred stock.
That $1.5 billion helps Lucid with capital expenditure and working capital needs as it gets closer to beginning production on its Gravity SUV later this year. The company hopes that vehicle will vault it into a larger consumer market beyond that of its ultra-luxury electric sedans.
But consumer interest in the Gravity isn't a given, and that helps explain why the stock's initial surge didn't hold this morning.
Lucid ended the quarterly period with about $4.3 billion of total liquidity, though. With the new investment on top of that, Lucid now has some time to try to drive a successful launch of the Gravity.
