Lucid shares lose despite record investment by Saudi investment fund 📉

• The shares of electric carmaker Lucid (LCID.US) are trading nearly 30% below IPO levels and have lost nearly 84% since the beginning of the year.
• Saudi Arabia's sovereign fund on December 22 bought $915 million worth of the company's shares at $10.68
• The Saudis are the majority shareholders and, according to the latest data from the SEC, now hold 85.7 million shares in the company, the shares are worth a total of $1.1 billion

Source: Finviz

The investment from the Public Investment Fund didn't help stem the company's share declines, as EV makers lost in a wave of cascading sell-offs in Tesla shares. In addition, investment fund analysts are pointing to the largest profitable EV manufacturers, among others, Tesla (TSLA.US), as potential beneficiaries of the Inflation Reduction Act (IRA). This group of profitable manufacturers does not include Lucid, Rivian (RVN.US) or Nikola (NKLA.US), the companies are mainly financed with debt. The drop in Lucid's share price is taking place despite the fact that Lucid is preparing to start selling cars in Europe, shareholders do not like the company's policy by which shares are successively 'diluted'.

Unlike some technology industries, car production is costly and requires significant production expenditures and time before revenues, profits appear, making it usually take longer to achieve positive cash flow'. With the uncertain macroeconomic situation and concerns about pops, it's hardly surprising that investors in 2022 have avoided shares of smaller, unprofitable electric car companies. However, some investors expect Tesla's dominance to encounter its limits despite its competitive advantages, and some customers will want to switch to rarer cars supplied by lesser-known EV manufacturers like Lucid and Rivian. We will find out in 2023 whether Tesla will indeed maintain its dominance and whether the established market position, brand and Elon Musk will give it a competitive edge in a tough environment.

Despite still having nearly 60 times the market capitalization of Lucid, Tesla has reported 'only' a 10% year-over-year decline from the California-based automaker this year, showing a clear decline in investor sentiment around the EV industry, despite global eco-trends and the IRA law, which in the US may stimulate demand for electric cars. Source: xStation5