Lucid looks to a different future
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Now that bankruptcy fears are at least temporarily out of the way for struggling EV maker Lucid Motors LCID 0.00%↑, investors are starting to speculate just where the luxury car company might end up.
Though its days as a public company are probably numbered given that its shares are down more than 90% since it went public in a reverse merger (SPAC) five years ago, its new restructuring advisers presumably have lots of options. Especially since the company is somewhat backstopped by a near 60% stake of the Saudi Public Investment Fund (PIF).
New CEO Silvio Napoli, in quelling bankruptcy rumors last week after a fresh plunge in shares, said the company has enough liquidity (some $700 million in this case) to operate well into next year. There is some runway for an auction, that means, or even time for a turnaround.
Given the Saudis will want to limit their losses, we’d bet on an auction. Shareholders who have pushed the stock up above $7 in the past week (from a low of about $5) likely are thinking similar thoughts. À fresh downgrade today bright it below $7 again
One obvious candidate would be Uber UBER 0.00%↑ which has an existing deal to buy 35.000 vehicles from Lucid in the next three years for its robotaxi fleet. Uber has already sunk $500 million into Lucid so it’s not a stretch to see them doing more. Other business partners range from Aston Martin, the British sports car company, to Nvidia NVDA 0.00%↑.
Finally, Lucid would be a small bite for one of the auto giants, such as Ford F 0.00%↑ or GM GM 0.00%↑ or even Tesla TSLA 0.00%↑, but that would require at least a shift in strategic direction for each of them back toward EVs. Crazier things have happened.
The process, as bankers and consultants like to call it, seems to be leading toward a deal if the stock price trend is any indication. Our guess would be sooner rather than later.
Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.
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Markets becoming better ally for climate investors
. . . . The debate about the impact of environmental, social and governance (ESG) investing has raged since long before the strategy was even known as ESG, writes Mark Hulbert. But a new study aims to settle that debate, finding that as environmental investing began to grow 20 years ago, its impact has gradually grown on the stocks of companies that commit environmental violations. The study found that prior to 2006, back when strategy was generally known as socially responsible investing and really a small niche of investing, its impact was limited. But from 2006 to the present, the impact on a company’s stock for environmental infractions has gradually grown, in line with the popularity of the strategy. Read how the study reaches that conclusion, and Hulbert’s analysis.
Thursday’s subscriber insights
Tesla’s AI ambitions only set to grow from here
. . . . If Tesla investors had any remaining doubts about Elon Musk’s ambition to make the company an AI and humanoid robot giant, even at the expense of its core auto business, those were snuffed out by the company’s second quarter earnings this week.
Despite strong revenue that beat expectations as the auto business showed signs of life for the first time in two years, shares fell on concerns that the company’s spending on AI, robot, and robotaxi initiatives soared, and looks set to keep surging.
Musk said capital expenditures would become a priority this year as Tesla tries to compete with the tech giants on AI. Capex spending of $5.8 billion in the second quarter caused Tesla to burn cash flow for the first time in two years, and the company said it expects to spend more than $25 billion when the year is done.
For Tesla investors who have supported the stock, which is down about 17% year to date, the turnaround in the auto business is welcome but likely not enough. Investors have been waiting for news from Musk on whether he would use his newly public SpaceX SPCX 0.00%↑ to buy Tesla, but he wouldn’t comment on the earnings call.
Given Musk’s AI ambitions, it makes sense that at some point there will be a merger of the companies, but these results did little more than to push any potential signal to later in the year. Perhaps Musk is waiting for the market in SpaceX shares to settle down, after they opened higher in their market debut last month but then fell below the offer price last week.
Or perhaps he’s waiting to see how the IPOs or rivals Anthropic and OpenAI shake out in coming months. Either way, these Tesla numbers show that Musk’s AI ambitions are now for him the only game in town.
Editor’s picks: Trouble with a T - for Texas; plus, check your local weather, please
Watch the video: No city in the United States has ever run out of water, but Corpus Christi, Texas, came dangerously close earlier this year, due to severe drought and water-intensive industrial activity. Could the city have been more prepared if it had included appropriate climate forecasting into future water planning? Why hasn’t more been done to provide viable solutions, like a desalination facility? Texas-based Inside Climate News reporters Dylan Baddour and Arcelia Martin join co-host Jake Bolster to discuss why Corpus Christi is on the brink of a water emergency.
Checking the weather
The National Weather Service today highlights the extreme weather events rolling across the U.S. Check your local forecast and adjust your plans accordingly. Flash points include:
Tropical Storm Bertha may lead to isolated flash flooding, tropical storm conditions and coastal flooding along the Gulf Coast and into southern Texas.
The risk of flash flooding is expected across portions of the southern mid-Atlantic/Carolinas, Tennessee Valley and the Southeast through Friday.
Monsoonal thunderstorms continue over the Southwest, Great Basin and parts of the Plains.
Hazardous heat continues over parts of the Southern Tier; builds over the Great Basin and Northern Plains Friday.
Words to live by . . . .
“Flowers always make people better, happier, and more helpful; they are sunshine, food and medicine to the mind.” — Luther Burbank, botanist.
Editor’s note: Callaway Climate Insights is taking a summer break next week. We’ll be back in your inbox the first week of August.