Penny stock (learn more about penny stocks here) Lucid Group (NASDAQ:LCID) gained in pre-market trading after the company announced a restructuring plan. This plan would involve reducing its current workforce by around 400 employees, or around 6%.
Lucid expects to complete the restructuring plan by the end of the third quarter of this year. As a result of this restructuring, the EV maker expects to incur restructuring charges in the range of $21 million to $25 million, mainly related to severance costs, employee benefits, employee transition, and stock-based compensation. The company expects to recognize around $19 million to $23 million of these charges in the second quarter of this year, with the majority of these charges likely to be paid by the third quarter of this year.
Why Is LCID Undertaking a Restructuring Program?
Lucid’s CEO Peter Rawlinson stated in a letter to his employees that while the company remained confident about its SUV, Gravity, he noted that the company had not yet started generating revenues from the Gravity SUV. As a result, LCID should remain “vigilant about costs.”
Additionally, he outlined three key priorities for the company. This included selling more Lucid Air sedans, advancing the Gravity SUV program with production intended to start at the end of this year, and maintaining strong cost discipline for the next phase of its business.
Lucid reported disappointing results in the first quarter as losses widened to a loss of $0.30 per share, while analysts were expecting the company to report a loss of $0.25 per share. However, the company had around $5 billion in liquidity at the end of Q1 after raising $1 billion through private placement to an affiliate of Saudi Arabia’s Public Investment Fund (PIF).
What Is a Good Price for LCID Stock?
Analysts remain sidelined about LCID stock, with a Hold consensus rating based on six Holds and one Buy and Sell each. Year-to-date, LCID has dropped by more than 30%, and the average LCID price target of $3.16 implies an upside potential of 16.2% from current levels.
