Saudi Prince Alwaleed bin Talal Al Saud has made a significant purchase of shares in electric vehicle manufacturer Lucid Group Inc (LCID.US), injecting a strong boost of confidence into the struggling automaker, which has been mired in losses and recently faced bankruptcy rumors.
According to regulatory filings disclosed on Tuesday, Alwaleed acquired 19.5 million shares of Lucid, valued at approximately $129.5 million, raising his stake to 5%. A spokesperson for the prince indicated that the bulk of this position was built during a recent sharp decline in Lucid's stock price.
Buoyed by this news, Lucid's shares surged 21.54% on Tuesday, reaching their highest level since April of this year. This investment comes during a turbulent period for the company. Earlier this month, Lucid denied market rumors that it was on the verge of filing for bankruptcy protection, but simultaneously acknowledged hiring AlixPartners, a restructuring advisory team, which triggered market panic and caused the stock to plunge as much as 57% in a single day.
However, the stock has gradually stabilized since then, rallying more than 50% from its all-time low set on July 14th by Tuesday's close. Analyst Eric Varghese described the investment as an undeniably significant vote of confidence for Lucid, indicating that Saudi investors still recognize the company's long-term value. He cautioned, however, that given Lucid's ongoing cash burn and substantial future financing needs, this stake purchase does not fundamentally alter the company's financial outlook.
Under the leadership of new CEO Silvio Napoli, Lucid is pushing forward with cost-cutting initiatives, including workforce reductions through organizational restructuring, and is fully committed to developing its next-generation mid-size vehicle platform. Market consensus suggests that the successful launch of this platform is critical for Lucid to achieve future profitability.
Despite the recent rebound, Lucid's stock has still declined approximately 72% over the past 12 months, negatively impacting the investment performance of its largest shareholder, the Saudi Public Investment Fund (PIF). The PIF currently holds roughly 45.4% of Lucid shares, with total cumulative investments exceeding $9 billion.
Alwaleed has been a long-time active participant in global capital markets. In 2022, he sold part of his stake in his listed investment company, Kingdom Holding, to the PIF for approximately $1.5 billion. Currently, he personally and through Kingdom Holding holds stakes in several international companies, including Citigroup Inc and Snap Inc. According to the Bloomberg Billionaires Index, his personal wealth is estimated at around $24.2 billion.
A Lucid spokesperson stated that the company does not comment on individual investors' transactions but acknowledged the investment and expressed gratitude for the independent trust shown by the market. According to Alwaleed's spokesperson, this investment was made directly by the prince, at a time when Lucid's market capitalization was below $2 billion. Following Tuesday's surge, the company's market cap has risen back above $3 billion.
Analysts note that in recent years, government bodies like the PIF and the Saudi Ministry of Investment have been encouraging major domestic family capital to participate in investment projects aligned with the "Vision 2030" strategy to support the kingdom's economic diversification. Alwaleed himself is also a key partner in PIF investment projects, with the two parties having previously co-invested in SpaceX.