It was revealed that the stock price of "American Xiaopeng" or privatization soared by 98%, but the bears could not sit still

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American Xiaopeng - Lucid, these two days to laugh.

Sales can't be sold, fame is incomparable, the new force in the United States car Lucid has always lived in the shadow of Tesla, but this time in the stock price, Lucid is going to lead the rise.

On January 27, Lucid's share price doubled directly, and the intraday increase was close to 98%, and then fell back to less than 50%, and once touched the circuit breaker suspension of trading.

On the same day, Lucid ranked 13th among U.S. stocks on the day with a trading volume of 207 million and a total turnover of 2.609 billion US dollars.

Lucid's current share price of $12.87 and a market capitalization of $23.53 billion rose 43% on the day, the biggest one-day gain in the stock's history. Due to the expansion of the increase, it also triggered a second circuit breaker on the day.

While it's still a distance from the $26.83 per share price it was first listed and a market cap of more than $40 billion, it's Lucid's best level in recent times. Earlier this month, Lucid's stock price also fell to an all-time low of $6.09.

The stock price fluctuated sharply, and the fuse was nothing else, but a "gossip" message:

Lucid is about to "sell" himself to the Saudi sovereign wealth fund, which is not short of money.

Whether acquired or not, the stock price is enough to make Lucid laugh, but Wall Street bears can't sit still...

01 The news of selling himself has not yet landed

Here's the thing:

Betaville, a US trading website, reported the "unprocessed" news that Saudi Arabia's sovereign wealth fund Public Investment Fund (PIF) intends to buy all of Lucid's remaining shares.

In 2018, Saudi sovereign wealth funds raised $1 billion to Lucid, making him its largest shareholder.

Although Lucid's share price in the past two years is difficult to say, PIF firmly holds and continues to increase its weight, and PIF currently holds more than half of Lucid's equity, about 65%.

Source: Lucid

Once Betaville's news is true, it means that the Saudi sovereign wealth fund, which is not short of money, intends to buy even the remaining 35% of the shares and completely privatize Lucid.

After this news came out, it can be said that a stone stirred up a thousand waves, and it was directly reflected in the stock price.

Lucid's shares rose nearly 98 percent intraday before hovering around $8 before reaching a high of $17.80 on Friday.

Source: Yahoo Finance

The gains have since narrowed to 43 percent, hitting a new closing high in nearly three months, and touched circuit breakers twice on the day to suspend trading.

Foreign media speculated that PIF's long-term plan is to buy Lucid in its entirety and then consider relisting it on the Saudi stock exchange in the next few years.

In response to this information, neither Saudi Arabia's sovereign wealth fund, the major shareholder of the acquirer, nor Lucid responded to the public.

In other words, the capital market is also blind with both eyes, all relying on gambling.

How did this news come out?

Mainly derived from a "uncooked" alert from trading site Betaville, "uncooked" is often used to refer to unverified market gossip information received by Betaville.

Betaville was founded by Ben Harrington in 2014 and broke several landmark scoops that year.

These include the £3.5bn merger of Carphone Warehouse, Europe's largest independent mobile phone retailer, and Dixons Retail, Europe's second-largest electronics retailer.

Ben Harrington is a full-time M&A journalist who has previously worked at the highest levels of the UK's financial journalism, covering M&A, private equity, hedge funds, stock markets and restructuring.

After joining The Daily Telegraph in 2005, Ben Harrington became The Daily Telegraph's first-ever takeover reporter.

Source: Betaville

Betaville's homepage describes itself as a "cheeky" site that follows dealers, traders, and anything else they find interesting.

At present, there is still no response from the parties to this news.

02 The bears began to rally

The soaring stock price also made Wall Street analysts unable to sit still.

In fact, less than half a year after Lucid's listing, Morgan Stanley analyst Adam Jonas pointed out in an investigation report that Lucid's stock price of about $27 at the time was significantly overvalued and may only be worth about $16.

Source: Lucid

Just before this round of limit increases, Cantor Fitzgerald analyst Andres Sheppard released a research report reiterating his "overweight" rating on Lucid with a target price of $18.

Sheppard said Lucid's fourth-quarter production and delivery figures brought some confidence, suggesting that production is starting to rise, so it remains bullish on Lucid's long-term outlook.

After this round of surge, the biggest losses were the bears.

Analyst firm S3 Partners predicted that short-sellers lost $685 million by market capitalization as Lucid shares soared on Friday. Of course, losses also occur only when the short seller closes the position.

Lucid's short interests currently account for 37% of its total float, compared to Tesla's 3.5%. In dollar terms, Lucid's short equity totaled $1.6 billion, compared to Tesla's $15.01 billion.

Clearly, Lucid has become a popular position for trading. Ihor Dusaniwsky, managing director of S3, asserted that as Lucid's short-sellers continue to climb their mark-to-market losses, their covering will continue after this short massacre.

An unclear news also made the bears target the company. Reuters reported that a long, short fund manager who had no previous exposure to Lucid said he decided to short Lucid.

The reason for going short is also simple, believing that Lucid's stock price surge this time is based entirely on rumors.

Garrett Nelson, vice president and senior equity analyst at CFRA Research, also said that in this case, rumors of Lucid's acquisition heightened the risk of investing in the electric vehicle stock market, and stocks like Lucid are very vulnerable to short squeezes.

Source: Lucid

Nielsen believes that if the Saudis buy the remaining shares of Lucid, they may invest more in solving the operational problems that limit Lucdi's production growth, which will provide Lucid with greater long-term viability.

However, Lucid's current production rate is only 38 vehicles per day, which is not suitable for mass production. By comparison, Tesla's production rate in the fourth quarter reached 4,779 vehicles per day.

03 Acquisition is not the ultimate goal

If Tesla's stock price rose for two consecutive days because of the fourth quarter earnings report released not long ago, then Lucid's performance is a bit outrageous.

Superelectric Lab has reported that Lucid, a company (portal), is not optimistic about its current production and operation.

In the fourth quarter of last year, Lucid produced 3,493 new vehicles at its Arizona facility, up 53% sequentially, and delivered 1,932 new vehicles over the same period. For the full year of 2022, a total of 7,180 new vehicles were produced, with a cumulative delivery volume of 4,369 units.

Source: Lucid

Although it exceeded the annual expectation of 6,000-7,000 vehicles, whether it was production or delivery, it was not a star and a half worse than Tesla.

According to the previously released financial report, Lucid's revenue in the first three quarters of 2022 was $350 million, with an operating loss of $1.844 billion, compared with an operating loss of $1.044 billion and a net loss of $832 million, compared with a net loss of $1.534 billion in the same period last year.

Looking back at its development, every important node of development is inseparable from the support of Saudi sovereign wealth funds, whether it is financial difficulties or supply chain crises, PIF has helped Lucid.

Last October, Lucid opened its doors in Riyadh, Saudi Arabia's capital, to showcase its new cars and technologies. Lucid Vice President Faisal revealed that the Lucid Air Deluxe Edition has thousands of orders in the Middle East.

Source: Lucid

Earlier, in April, Lucid also announced this year that it had signed an agreement with the Saudi government to build factories in Saudi Arabia, while the Saudi government would buy up to 100,000 Lucid electric vehicles in 10 years.

From the perspective of PIF's holdings in US stocks, Lucid has always been its key position, so the acquisition of Lucid by Saudi sovereign wealth funds is not nonsense.

For Saudi Arabia, an oil country, its layout in the field of electric vehicles is becoming more and more obvious.

In early November last year, Saudi Arabia announced the establishment of a joint venture with Foxconn to launch its own electric vehicle brand Ceer, and cooperated with BMW Technologies to create a local electric vehicle in Saudi Arabia, and the first electric model of the Ceer brand is expected to be launched in 2025.

Source: Foxconn

On the other hand, once Lucid is acquired by Saudi sovereign wealth funds, its subsequent development focus will inevitably change.

Lucid is now based in the United States, and is also actively expanding its global business. For example, in Europe, Lucid began deliveries in Germany and the Netherlands last December. As early as November 2021, Lucid's first financial report after listing revealed that it plans to enter the Chinese market in 2023.

At the same time as entering Europe, Lucid's official website also updated the recruitment information, showing that the work location is located in Shanghai, which involves a total of 14 positions in digital informatization, hardware engineering, legal, logistics management, supply chain, retail and other fields, suspected of preparing for the sale in China.

Source: Lucid

For its part, PIF already owns nearly 70% of Lucid's shares, and according to Lucid's latest closing price of $12.87, PIF needs to pay another $8.9 billion to complete the acquisition.

In November 2021, Lucid was trading at a whopping $58, nearly 3.5 times higher than its current closing price. Is this a discount for a PIF that is not bad money?

If the news of the acquisition is confirmed, PIF could continue to fully fund Lucid to ramp up production and then re-list at a higher valuation, which could be a win-win for both parties.

Of course, this will have to wait for official news, and don't forget that it was Tesla that was last reported to be privatized.

And the party Musk, also because of the privatization tweet, now there are still a bunch of lawsuits after the ass.

The author | Truman, editor | Zaizhou