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Lucid Under SEC Investigation; Shares Drop – Report

American electric vehicle (EV) manufacturer Lucid Group (LCID) has joined a growing list of companies being scrutinized by U.S. regulators for their mergers with shell entities. The company disclosed that it received a subpoena from the U.S. Securities and Exchange Commission (SEC) on December 3 related to an investigation into its blank-check deal, according to a Reuters article. 

Following the revelation, shares of the company declined 5.1% to close at $44.86 on Monday. 

“Although there is no assurance as to the scope or outcome of this matter, the investigation appears to concern the business combination between the Company (Churchill Capital Corp. IV) and Atieva Inc and certain projections and statements,” Lucid said in a regulatory filing. 

The SEC has sought certain documents from Lucid related to the deal. It has been notified that the company is fully cooperating with the regulators. 

However, the SEC has refrained from commenting on its action against Lucid. (See Lucid stock charts on TipRanks) 

Background 

Earlier this year, Lucid Motors inked a deal with a special purpose acquisition company (SPAC) Churchill Capital IV Corp, a blank-check firm, to become a publicly-traded company. The combined company was valued at $24 billion. Notably, it was one of the biggest SPAC deals of the year. Post-completion of the deal, the company is now named Lucid Group. 

Several EV makers have gone public through SPAC deals. According to the source, these companies have come under the scrutiny of federal agencies and regulators. Among others, Nikola (NKLA) and Lordstown Motors (RIDE) are also under regulators’ investigations. 

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Wall Street’s Take 

On November 16, Citigroup (C) analyst Itay Michaeli reiterated a Buy rating and a price target of $57 (27.1% upside potential) on the stock. 

Michaeli is positive about the stock based on the company’s 2022 volume target, along with both commercial and brand momentum.

Consensus among analysts is a Moderate Buy based on 2 Buys and 1 Sell. The average Lucid price target of $44.33 implies 1.18% downside potential from current levels. Shares have gained 69.3% over the past six months.

Risk Analysis

According to the new TipRanks’ Risk Factors tool, Lucid stock is at risk mainly from three factors: Finance and Corporate, Production, and Legal and Regulatory, which contribute 35%, 25%, and 17%, respectively, to the total 84 risks identified for the stock.

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