The Saudis spent 5.4B to get 60% of Lucid. I calculated backward and basically, they spent an equivalent of $3.93 per share (probably more for fees) to get the privilege insider deal. Yep, the market is not doing well with high-interest rates and decreased demand for EVs. However, there are some light at the end of the tunnel:
- Lucid high-price tech makes it a tough sale with the high interest rate given Americans usually lease or mortgage their cars. However, It will be significantly different when all the cars are more affordable with the interest rate coming down next year. EV competition is hot but Lucid makes one of the best luxury high-tech EVs. Lucid truly makes great cars and the new models' prices are significantly more affordable than the first Lucid models.
- The Government of Saudi Arabia, under which the Government will purchase up to 100,000 vehicles over a ten-year period, with an initial commitment to purchase 50,000 vehicles and an option to purchase up to an additional 50,000 vehicles over the same period. This would help push up the future earnings significantly.
- Saudis will most likely make more efforts and possible financial backing to help Lucid turnaround given they own 60% of the company.
- Lucid may be bought by another car company at a significant discount for its advanced luxury tech with huge retailer's loss but at a price that beats the Saudis' $3.93+/share investment.
I think $3.80 is a good entry point with the Saudis' backing. I doubt they would let Lucid go without a fight. Lucid supposedly has enough money to last until the middle of 2025. The company may just be able to pull it off especially if the interest rates come down and make their cars more affordable. I made money in the past with Lucid stock but sold it at a much higher multiple compared to the current price. Now, the stock price is even cheaper than what the Saudis paid which makes it attractive to me once more.
It is JMHO but What do you think?
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