The Saudi sovereign wealth fund, formally known as the Saudi PIF, remains sanguine on Lucid Group’s (NASDAQ: LCID) prospects, as illustrated by the fund’s most recent Form 13-F filed with the SEC. As per the latest filing, the Saudi PIF has maintained its gigantic 62.7 percent stake in Lucid Group, consisting of 1,015,252,523 shares. As of the end of June, the sovereign wealth fund’s stake in Lucid Group was valued at $17.42 billion. While announcing its earnings for Q1 2022, Lucid Group had slashed its production target for the year from over 20,000 units to between 12,000 and 14,000 units. As a result of this downgrade, some investors remained apprehensive that the Saudi sovereign wealth fund might choose to cash out of the stock, entailing carnage in its wake. Nonetheless, those fears have not been realized to date, although the risks around the stock remain elevated. Consider the fact that Lucid Group further slashed its yearly production target to between 6,000 and 7,000 units while announcing its earnings for the second quarter of 2022. It also earned just $97.3 million in revenue during Q2 against expectations of $157.12 million. Will the latest guidance downgrade prompt the Saudi PIF to abandon its rosy outlook vis-à-vis Lucid Group? We’ll know once the ongoing third quarter ends and the sovereign wealth fund again files the requisite Form 13-F. At this stage, the Saudi PIF has to weigh the growth outlook of Lucid Group against its ongoing manufacturing woes and the attendant difficulty in ramping up production cadence. On the sunny side, the Saudi state has been fairly supportive of Lucid Group, recently awarding around $3 billion in incentives to the EV manufacturer for establishing a 155,000-units-per-year production facility in the Kingdom. The Saudis have also signed an agreement to purchase up to 100,000 electric vehicles from the company over the next 10 years. As we had noted in a previous post, Lucid Group currently constitutes a prestige project for the Kingdom. Consequently, the chances that the Saudi PIF would simply abandon the company due to ongoing production woes remain remote but material. After all, Tesla was able to emerge from a similar stagnation following years of toil. Meanwhile, the Saudis, further enriched by the ongoing commodity supercycle, can certainly afford to remain in the wait-and-see mode for the foreseeable future.
