Before the Bell: Lucid Sells $1.5 Billion in New Stock, Disney’s Avatar 2 Misses Its Number

Premarket action Tuesday had all three major U.S. indexes trading mixed. The Dow Jones industrials were up 0.05%, the S&P 500 up 0.14% and the Nasdaq 0.08% lower.

Ten of 11 market sectors closed lower Monday, with consumer cyclicals (−1.66%) and tech (−1.42%) declining the most. The energy sector (0.13%) posted the day’s only gain.

Traders are beginning to worry about fourth-quarter earnings coming in weaker than forecast, and a report that investors are rebalancing their portfolios with more emphasis on bonds added pressure to stock prices. No bit of good news surfaced, and the day’s biggest share price gain among S&P 500 stocks was barely 1.6%, while the biggest loss was about 9%.

The Census Bureau releases its monthly report on housing starts and new building permits before markets open Tuesday morning. Economists expect new starts to total 1.395 million, down from 1.425 million in October. New permits are also expected to fall, from 1.526 million in October to 1.495 million in November.

The National Association of Realtors reports November existing home sales on Wednesday, and the total is also expected to be lower than in October. Also on Wednesday, the U.S. Energy Information Administration issues its weekly report on petroleum inventories, and the Conference Board reports its consumer confidence index for December.

Electric vehicle maker Lucid Group Inc. (NASDAQ: LCID) raised more than $1.5 billion in an at-the-market sale of some 56.2 million shares that grossed approximately $600 million and a private placement of some 85.7 million shares with Saudi Arabia’s Public Investment Fund (PIF) affiliate Ayar Third Investment Co. According to the announcement, Ayar will pay the volume-weighted average price achieved in the at-the-market offering. As of November, PIF owned about 1.02 billion shares of Lucid, or just over 60% of shares outstanding.

Lucid is expecting to build about 6,500 vehicles this year, half its original plan, and that is barely enough to keep the lights on. The company reported $3.3 billion in cash at the end of the third quarter and long-term debt of nearly $2 billion. As the company builds more cars, it needs more cash. Including the new capital, analysts believe the company now has enough cash to last into the early months of 2024. The stock traded up more than 5% in Tuesday’s premarket.

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Walt Disney Co. (NYSE: DIS) is recovering some of its share price loss from Monday, when the company’s latest blockbuster, “Avatar: The Way of Water,” opened to ticket sales of $134.1 million domestically and $307.6 million internationally. That was good enough for the sixth-best opening of the year and the 38th-best of all time but failed to meet analysts’ expectations for a domestic opening of $175 million and Disney’s own forecast of a $135 million to $150 million opening weekend.

Disney CEO Bob Iger was the head of the company in 2010 when Avatar creator James Cameron was given the green light by Fox to work on the sequel, originally expected to be released in 2014. Three sequels had been greenlighted by the time Iger and Disney completed the $71 billion acquisition of Fox in 2019. Cameron said in an interview that Avatar 2 will need to do $2 billion in ticket sales in order to break even. The original film did worldwide box office sales of $2.74 billion, about $750 million domestically.

The disappointing opening weekend took Disney stock down 4.77% on Monday and raises the stakes for Iger, who has been brought out of retirement to fix Disney’s problems. Avatar 2 did not help.

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