Key Takeaways:
Lucid Group Inc. denied a report that it is weighing Chapter 11 bankruptcy protection, calling the rumors "completely false" after its shares plunged more than 50% in their biggest intraday drop on record.
"The company has sufficient liquidity to carry its operations well into next year," Nick Twork, Lucid's chief communications officer, said in a statement. "It has not formed any special Board committee to explore the scenarios reported today."
The denial came after an electric vehicle blog reported that Lucid was considering either filing for bankruptcy or going private on the recommendation of consulting firm AlixPartners. Twork said AlixPartners is assisting Lucid on strengthening its operations "and nothing else." The stock, which fell as much as 52% during the session, recovered to trade at $4.72 a share by midafternoon, down about 14% from its opening price.
Lucid has struggled to find buyers for its luxury EVs despite their technological edge. The company delivered 3,953 vehicles in the second quarter, only slightly more than the same period last year. It has laid off more than 2,000 employees this year as part of a sweeping restructuring and eliminated a second production shift at its Arizona factory to align output with demand. The company recently named a new CEO and is preparing to launch a smaller, more affordable electric SUV later this year.
The bankruptcy rumor, even if unfounded, underscores the precarious position of EV startups navigating a demand slowdown and price war intensified by Tesla Inc. and BYD Co. Lucid has a partnership with Uber Technologies Inc., which committed to buying at least 35,000 Nuro-equipped Lucid vehicles over the next few years, including 10,000 Gravity SUVs and 25,000 based on the upcoming midsize platform. But converting those commitments into revenue depends on Lucid surviving long enough to deliver. The company's cash position and ability to ramp production of the lower-priced SUV will determine whether it can stabilize investor confidence.
This article is for informational purposes only and does not constitute investment advice.
