Shares of Lucid Group (LCID) came under pressure, closing 10.9% lower on Wednesday after investors rotated out of the stock in bulk, as reflected through a 13 times growth in trading volume.
The sell-off in the shares of this luxury electric vehicle manufacturer followed the expiration date of the lock-up period for some of its early and most significant investors.
Lucid merged with Churchill Capital Corp IV (CCIV), a special purpose acquisition company, and began trading on NASDAQ on July 26. Lucid announced that the transaction with Churchill Capital included “$2.1 billion cash contribution by CCIV and a $2.5 billion, fully committed PIPE (private investment in public equity) deal with an investor lock-up provision.”
The PIPE investment in Lucid involved funds managed by Fidelity Management & Research LLC, BlackRock, Neuberger Berman, Franklin Templeton, and Wellington Management, among others. Importantly, the deal included a lock-up provision that kept these investors from selling Lucid stock until September 1, 2021.
While the expiration of the lock-up provision certainly dragged Lucid stock down, it had already been on a downtrend since August 24. Furthermore, it has lost nearly 34% of its value since listing. (See Lucid Group stock charts on TipRanks)
The company’s multi-product pipeline, favorable industry trends, and large addressable market excite some investors. However, I maintain a Neutral outlook on Lucid stock and favor Tesla (TSLA) in the EV space. (See Electric Vehicles Stock Comparison on TipRanks)
Meanwhile, TipRanks’ Stock Investors tool indicates that investors currently have a Very Negative outlook on Lucid Group stock, with 2.8% of investors who hold portfolios in TipRanks decreasing their exposure over the past month.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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