Morgan Stanley Reiterates Underweight on Lucid, $5 PT

Morgan Stanley analyst Andrew Percoco reiterated an Underweight rating and $5 price target on Lucid Group Inc.

(NASDAQ: LCID).

“What happened? Lucid shares fell as much as ~50% today, following a report that the company was evaluating strategic alternatives, including a potential take-private or Chapter 11 filing.

However, the stock pared losses closing down 16% after Lucid issued a statement denying these rumors.

Our take: While Lucid has denied many of the claims in the article, we believe some of the strategic recommendations – such as de-emphasizing Europe and Air sedan – make sense, since the company likely needs to remain in capital-preservation mode ahead of the midsize launch.

As discussed in more detail below, we believe that Lucid will need to raise significant capital in the interim to fund the midsize ramp, but refrain from commenting on any hypothetical Chapter 11 or take-private proceedings at this time.

According to unnamed sources, Lucid has retained AlixPartners as an outside adviser – a relationship the company has since confirmed – with the firm reportedly set to present its findings to Lucid’s board ahead of its next meeting.

The article states that “whether Lucid should be taken private or seek Chapter 11 protection is among the scenarios the adviser has been asked to weigh”.

Notably, the report does not identify who assigned AlixPartners this mandate.

As of now, AlixPartners has reportedly recommended 1) another round of restructuring across the U.S. and Europe, with the company concentrating on Gravity SUV production and quality, 2) temporarily de-emphasizing the Air sedan, 3) prioritizing the Uber robotaxi partnership and Saudi AMP-2 plant, 4) protecting the late-2026 Cosmos launch timeline, and 5) pausing further expansion into European markets.

Lucid has since confirmed that it is working with AlixPartners only on matters of improving execution, strengthening operations, and realizing the value of Lucid’s technology, products, and innovation.

The company also stated that it has not formed any special Board committee to explore the scenarios reported, and reiterated that it has sufficient liquidity to carry operations well into next year – see full statement below.

While Lucid has denied the claims in the report, we believe the company’s new management team is keenly focused on strengthening the business and reducing cash burn as it readies for the midsize launch.

For context, we estimate Lucid will burn $3.7bn in 2026 and raise ~$2.5bn of debt and ~$1bn of equity during the year.

The company has already secured a significant portion of this financing, drawing ~$1.3bn under its DDTL facility in April (~$500m) and July (~$800m) and announcing a $1.05bn capital raise from PIF, Uber (covered by Brian Nowak), and a registered public offering in April.

Management noted that, giving effect to the capital raise and DDTL increase, Lucid would have had ~$4.7bn of total liquidity at the end of 1Q26.

The additional liquidity is intended to support the Gravity production ramp and launch of the upcoming Midsize vehicle platform.

We also forecast LCID issuing $2bn of equity and $500mn of debt in 2027, increasing potential dilution risk.

We expect the company to remain FCF-negative through 2030, though approaching breakeven (company guides to positive FCF late decade).”

This research note is reproduced verbatim from the issuing firm. Price Target never edits, paraphrases or alters analysts’ words — we only republish them in one place.