Shares of Lucid Group (NASDAQ:LCID) experienced a significant rally on Friday, closing at $5.92, a gain of $0.80 or 15.63%. This surge added approximately $312 million in implied equity value, based on the company's 390.26 million outstanding shares. The jump came after a volatile week that saw the stock drop 3.73% on Monday following another restructuring announcement.
The rally outpaced the fundamentals of the cost-cutting plan announced earlier this week. Lucid disclosed in an SEC filing that it expects $158 million in annualized savings from cutting about 18% of its U.S. workforce and eliminating the second shift at its AMP-1 manufacturing facility. The company also estimated cash charges of $32 million related to the plan, with most of the restructuring expected to be completed by the end of the third quarter.
The single-day increase in market capitalization is almost double the annualized savings target, raising questions about the sustainability of the rally. With the stock now trading at levels that already price in significant cost-control benefits, there may be limited upside for investors banking solely on further job cuts.
Trading volume on Friday surged to 35.52 million shares, representing 216% of the 65-day average. According to MarketWatch, short interest stood at 65.87 million shares as of June 15, meaning Friday's volume amounted to roughly 54% of the outstanding short positions. While there is no definitive evidence of short covering, the heavy trading activity highlights how quickly a low-priced, heavily shorted EV stock can move when buyers step in.
The broader market was mixed, with the Nasdaq Composite slipping 60.99 points, or 0.2%, to close at 25,297.62 on Friday. The tech-heavy index fell 4.6% for the week, weighed down by weakness in AI-related stocks.
Lucid's investor relations website shows the June 22 8-K filing as its most recent SEC submission, with no new company filings before Friday's jump. The 8-K reported the departure of Marc Winterhoff as chief operating officer, a position that has been eliminated.
Analysts remain cautious on Lucid's path to profitability. BNP Paribas Equity Research senior analyst James Picariello described the company as being on a "steep road to breakeven," according to Business Insider. Picariello noted that he saw no "direct implication" for Lucid's contract-manufacturing arrangements with Uber Technologies (NYSE:UBER) and Nuro.
Lucid's cash position has been a concern since the first-quarter earnings report in May. The company posted $282.5 million in revenue, with production of 5,500 vehicles and deliveries of 3,093. Then-interim CEO Winterhoff stated that Lucid was "aligning production and delivery with customer demand," while CFO Taoufiq Boussaid highlighted that the company had raised "over $1 billion in new capital" and pointed to "elevated inventory" that could be converted into revenue and cash.
Looking ahead, Nasdaq will be open for a full trading week, with the exchange closed on July 3 for Independence Day. Lucid's investor relations site lists no upcoming events after the May 5 first-quarter earnings call.
