Lucid Group has a powerful backstop with Saudi Arabia relationship - Morgan Stanley
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Morgan Stanley updated on Lucid Group (NASDAQ:LCID) after digesting the electric vehicle maker's deliveries update. Analyst Adam Jonas forecasts several billion dollars of new capital needs for LCID in FY23 and FY24, but maintains an assumption that the company will be able to source sufficient funds to continue innovating and growing.
Jonas and team openly asked if investors fully appreciate the supportive role of the Kingdom of Saudi Arabia when valuing LCID.
"It is our working assumption that the relationship between the Kingdom of Saudi Arabia and Lucid could extend beyond a controlling shareholder status. In our opinion, the Public Investment Fund stake in LCID represents a âseat at the tableâ for the energy transition story that aligns with the KSAâs long term economic and social reforms of Vision 2030."
Morgan Stanley thinks investors should appreciate the potential for further expansion of the relationship and the benefit of having long-term and highly capitalized strategic partners. The partnership is seen helping LCID to co-invest/support long-term infrastructure and supply chain development, as well as with talent attraction and technology acquisition/partnership.
The positive stance on Lucid Group (LCID) is on a long-term view. For now, Morgan Stanley has slotted with an Underweight rating and price target of $12 due to macro and sector headwinds.