Lucid Group snapped a three-day losing streak on Wednesday, soaring 28.79 percent to close at $5.95 apiece as investors poured funds back in after the company denied rumors that it was considering bankruptcy or a take-private transaction.
The rally came after Lucid Group, Inc. (NASDAQ:LCID) CEO Silvio Napoli forcefully debunked an exclusive news report by electric-vehicles.com, which cited two people privy to the matter as saying that restructuring adviser AlixPartners is set to deliver findings to the EV-maker’s board before its next meeting.
According to the EV-focused website, the strategic options under review include taking the Saudi-backed EV maker private or filing for Chapter 11 bankruptcy protection.
For illustration purposes only. Photo from Lucid Group
‘False Reports’
In a LinkedIn post, Napoli said that the company generally does not comment on rumors. However, the claims were far from the facts “that they require a direct response.”
“Lucid is not considering bankruptcy or a transaction to take the company private. Those reports are false. The Board did not explore either scenario. Period,” he firmly said.
“My priority is clear: turn this company around. That is where the leadership team and I are focused,” he added.
Investors are expected to get a clearer picture of the company’s financial health when it reports its earnings performance in the second quarter of the year on August 4. A conference call will be held after market close on the said date to elaborate on the results.
Sufficient Cash
Seeking to reassure investors after the sharp sell-off brought about by the report, Napoli said that Lucid Group, Inc. (NASDAQ:LCID) currently has “sufficient liquidity” to fund its operations well into next year.
Hedge Fund Participation Down
Institutional sentiment, however, notably weakened in the previous quarter of the year.
Based on data from Insider Monkey, 23 hedge funds held stakes in Lucid Group, Inc. (NASDAQ:LCID) in the first quarter of the year, markedly fewer than the 27 funds in the quarter prior.
Collectively, the funds held $59.9 million worth of stake, also a marked drop from the $66.86 million quarter-on-quarter.
While management’s denial immediately eased concerns about the company’s financial health, investors are likely to remain focused on Lucid Group, Inc.’s (NASDAQ:LCID) ability to improve vehicle demand and strengthen its financial position over the coming quarters.
Its earnings in the second quarter are expected to serve as the next major catalyst in determining whether Wednesday’s rally marks the start of a broader recovery or merely a short-lived relief bounce.
