Lucid Group Inc (NASDAQ:LCID)
After allegations surfaced that six of Lucid Group Inc (NASDAQ:LCID) senior executives had been sacked or had left the firm voluntarily, investors sold off shares of the premium electric vehicle producer by more than 5% on Wednesday morning.
Stocks have recovered considerably since early afternoon but are still down 0.8% at 12:45 p.m. ET today.
What’s the Reason?
Business Insider reports that among the departing employees are two vice presidents (of global production and of programs), two “heads” (of Arizona operations and of new product introduction), a senior manager (of logistics engineering), and a director (of “operational excellence”). According to Business Insider, these officials were “high level,” and all had a hand in the company’s attempts to boost output at its Casa Grande, Arizona factory, which only produced 1,405 electric vehicles in H1 but aspires to create between 6,000 and 7,000 units by the end of the year.
Should this cause alarm among Lucid investors?
Perhaps if the executives left voluntarily, like sailors departing a sinking ship. Nonetheless, Lucid Insider, a blog dedicated to the company’s goings-on, notes that CEO Peter Rawlinson promised in the company’s last earnings call to overhaul its logistics processes and introduce “a series of improvements to simplify the system” and that last month, the company hired Senior Vice President of Operations Steven David to accomplish this. It’s possible David is cleaning the house to increase output, and the exits of critical executives are connected to this.
The proof of the pudding, so to speak, will be in Lucid Group Inc (NASDAQ:LCID) third-quarter earnings report, which will either indicate an increase in production rates or warn investors that Lucid is likely to fall short of its revised production target for the year. Of the six leaving executives identified, only one (former Head of New Product Introduction David Peel) has publicly boasted on LinkedIn about obtaining a new position, which may be the most significant indication yet for investors that this news is nothing to be concerned about (at Nikola).
Their silence shows that the other five didn’t depart of their own will but were removed as part of a house cleaning. However, that doesn’t rule out the potential they were fired because they couldn’t get manufacturing back on track, meaning Lucid Group Inc (NASDAQ:LCID) may still fall short of its Q3 production targets.
However, this also indicates that Lucid is making efforts to improve Q4 results relative to Q3.
Featured Image- Megapixl @Iandewarphotography