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lucid group (NASDAQ:LCID) cooled in afternoon trading on Monday after Friday’s monstrous 40% rally based on speculation that Saudi Arabia’s Public Investment Fund may be preparing to acquire the rest of the EV maker it doesn’t have. already owns.
While the story has seen no new developments, Morgan Stanley previously weighed in on the Lucid-Saudi PIF relationship in a note prior to the FT’s Betaville report. Analyst Adam Jonas said the company’s working assumption is that the relationship between the Kingdom of Saudi Arabia and Lucid could extend beyond a majority shareholder status.
“In our view, the Public Investment Fund’s participation in LCID represents a ‘seat at the table’ for the energy transition story that aligns with KSA’s long-term economic and social reforms of Vision 2030. As such, We believe investors should appreciate the potential for further expansion of the relationship as demonstrated to date with previously announced manufacturing plans at KSA and other activities.”
Morgan Stanley believes that having highly capitalized, long-term strategic partners represents a significant advantage in building sustainable transportation ecosystems. Specifically, the firm believes that LCID’s ability to support long-term infrastructure and supply chain development, as well as talent attraction and technology acquisition/partnership, is potentially enhanced by guidance and support. of the Kingdom of Saudi Arabia. However, MS remains an Underweight rating on LCID in the short term, as the EV maker needs to overcome execution hurdles in a year that will see severe EV deflation.
Meanwhile, Seeking Alpha author The Asian Investor explains why takeover rumors may be unfounded based on the Saudi PIF’s lack of a strong takeover track record.
Lucid shares fell 7.60% in early trading Monday afternoon at $11.90. The 52-week trading range for the very short stock is $6.09 to $30.85.
