Morgan Stanley warned that Lucid Group Inc. (LCID) may need to raise $2.5 billion in fresh capital, a move the firm believes could increase dilution risk for existing shareholders. The firm maintains an 'Underweight' rating and a $5 price target on Lucid, implying a 5% potential downside from current levels, according to TheFly. Morgan Stanley said reducing cash burn remains a key priority, but it expects Lucid will still need to raise additional capital to fund its operations despite the new management team's focus on improving execution and strengthening the business. Lucid shares were up nearly 20% in Wednesday morning's trade, with LCID stock among the top trending tickers on Stocktwits at the time of writing.
Morgan Stanley Maintains Underweight Rating on Lucid Stocks
Morgan Stanley said it believes Lucid's new management team is focused on improving execution and strengthening the business as the company prepares for its midsize vehicle launch. The firm said reducing cash burn remains a key priority, but it expects Lucid will still need to raise additional capital to fund its operations.
Koyfin data shows that the average 12-month price target on Lucid is $8.3, implying an upside potential of 52% from current levels. Of the 12 analysts covering the stock, eight have a 'Hold' rating, one has a 'Buy' rating, while three have a 'Sell' or 'Strong Sell' rating.
RBC Capital Lowers Price Target to $7
Earlier this week, RBC Capital Markets analyst Tom Narayan lowered his price target on Lucid Group to $7 from $8 while maintaining a 'Sector Perform' rating as part of a broader preview of second-quarter (Q2) results for global automakers. Narayan said higher fuel prices could encourage U.S. consumers to shift toward smaller, more fuel-efficient vehicles, though not necessarily electric vehicles. He believes that the trend is likely to benefit Japanese automakers more than Detroit's traditional "Big Three" manufacturers.
Lucid Denies Bankruptcy Rumors and Confirms 2027 Liquidity
After a report on Tuesday stated that Lucid may be considering options to take the company private or file for bankruptcy proceedings, the company officially denied the rumors, calling them "completely false." In a statement to Stocktwits, the company said that it has sufficient liquidity to continue its operations well into 2027, while adding that it had not formed any board committee to consider going private or filing for bankruptcy.
Lucid appointed a new CFO and announced other leadership changes earlier this month, while halving the number of executives who report to CEO Silvio Napoli. "We are simplifying the organization, strengthening leadership, enforcing accountability and aligning our structure with the priorities that matter most: customers, quality, and innovation," said Napoli. Napoli was appointed Lucid's CEO in June, succeeding interim chief Marc Winterhoff. Winterhoff had led the company since February this year, when co-founder Peter Rawlinson stepped down as CEO.
Retail Sentiment Trends Extremely Bullish
Retail sentiment on Stocktwits around Lucid trended in the 'extremely bullish' territory, with message volumes at 'extremely high' levels at the time of writing. LCID stock is down 48% year-to-date and 76% over the past 12 months. The Vanguard Small-Cap Growth Index Fund ETF (VBK) is up 26% over the past 12 months, while the iShares Russell Mid-Cap ETF (IWR) is up 19%.
FAQ
What did Morgan Stanley say about Lucid stocks?
Morgan Stanley warned that Lucid Group Inc. may need to raise $2.5 billion in fresh capital, which the firm believes could increase dilution risk for existing shareholders. The firm maintains an 'Underweight' rating and a $5 price target on Lucid.
Did Lucid deny bankruptcy rumors?
Yes, Lucid officially denied bankruptcy rumors, calling them "completely false." In a statement to Stocktwits, the company said that it has sufficient liquidity to continue its operations well into 2027 and had not formed any board committee to consider going private or filing for bankruptcy.
Who is Lucid's current CEO?
Silvio Napoli was appointed Lucid's CEO in June, succeeding interim chief Marc Winterhoff. Napoli announced leadership changes earlier this month, including appointing a new CFO and halving the number of executives who report directly to him.
