LCID stock is moving higher in early trading on December 10, 2021, as traders were surprised by the company’s ability to raise $1.7 billion dollars in a senior note offering.
Lucid Group tapping convert market a ‘wise decision,’ says Morgan Stanley
After Lucid Group announced its intention to offer $1.75B in 144A Green Convertible Senior Notes due 2026, Morgan Stanley analyst Adam Jonas called the fact that “a company that has delivered some tens of vehicles in its existence” was able to tap the convert market under potentially favorable terms for an offering of this nature “impressive” and a “wise decision.” According to Jonas, “taking advantage of a strong stock price to transform an investor vote of confidence into real/hard dollars is a strategic underpinning of any successful startup.” The stock market “clearly and very significantly has a more bullish view” on Lucid’s valuation, added Jonas, who maintains an Underweight rating and $16 price target on the shares.
The notes will be senior, unsecured obligations of Lucid, will accrue interest payable semi-annually in arrears, and will mature on December 15, 2026, unless earlier repurchased, redeemed, or converted. Noteholders will only have the right to convert their notes in certain circumstances and during specified periods. Lucid will settle conversions of notes by paying or delivering, as applicable, cash, shares of its Class A common stock (the “common stock”) or a combination of cash and shares of its common stock, at Lucid’s election. The notes will be redeemable, in whole or in part (subject to certain limitations), for cash at Lucid’s option at any time, and from time to time, on or after December 20, 2024 and on or before the 31st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of Lucid’s common stock exceeds 130% of the conversion price for a specified period of time and certain liquidity conditions are satisfied. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The interest rate, initial conversion rate and other terms of the notes will be determined at the pricing of the offering.
Lucid intends to allocate an amount equal to the net proceeds from the notes to finance or refinance, in whole or in part, one or more new or existing “Eligible Green Investments,” including the development, manufacture, or distribution of products, key components, and machinery related to electric vehicles or energy storage systems, as well as investments and expenditures related to renewable energy, energy efficiency, and sustainable water and waste management. Pending such allocation, Lucid intends to use the net proceeds of the offering for business expansion and general corporate purposes, which may include investing in our manufacturing capabilities, expanding and improving operations such as our retail and service network, investing in research and development, and supporting other potential growth opportunities.
The offer and sale of the notes and any shares of common stock issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of common stock issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.
Lucid’s mission is to inspire the adoption of sustainable energy by creating the most captivating electric vehicles, centered around the human experience. The company’s first car, Lucid Air, is a state-of-the-art luxury sedan with a California-inspired design that features luxurious full-size interior space in a mid-size exterior footprint. Underpinned by race-proven technology, Lucid Air offers up to 520 miles of range and 1,111 horsepower, and was named the 2022 MotorTrend Car of the Year. Customer deliveries of Lucid Air, which is produced at Lucid’s new factory in Casa Grande, Arizona, are underway.
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Financial Journey gave his opinion on Lucid Motors stock.
LCID Stock Technical Analysis
The long term trend is positive and the short term trend is neutral. The long term trend gets the benefit of the doubt for now. LCID is currently trading in the middle of its 52 week range. The S&P500 Index however is currently trading near new highs, so LCID is lagging the market. There is a support zone ranging from 36.30 to 36.51. This zone is formed by a combination of multiple trend lines and important moving averages in multiple time frames. LCID has an average technical rating and it also does not offer a high quality setup at the moment. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when LCID stock is a good entry.