Lucid Plunges as Key Stockholders Are Freed From Trading Lockup

As investors in Lucid Group Inc. grapple with owning too much of a good thing, some early investors appear to be heading for the exits. 

The luxury electric-vehicle startup plunged to fresh lows on Wednesday, tumbling as much as 19%, as key investors were freed to sell shares for the first time since it went public via special purpose acquisition company, or SPAC, in July. Investors could’ve seen it coming: the lockup expiry was known since February. 

When Lucid’s SPAC deal with Churchill Capital Corp. IV was formally announced, part of the fanfare was its broad appeal among meme-stock traders and well-heeled investors alike. As average investors crowed about the possibility of an EV revolution, Lucid and Churchill touted $2.5 billion in supportive financing for the merger -- the largest common stock PIPE, or private investment in public equity, associated with a SPAC deal at the time, according to the companies. 

That PIPE was anchored by a who’s who of institutional investors including the Public Investment Fund, funds and accounts managed by BlackRock Inc., Fidelity Management & Research LLC and Franklin Templeton. The funding commitment was also unique in that it came with a provision that those holders could freely trade their stock on the date the PIPE shares were registered or Sept. 1 -- whichever came later. 

Chief Executive Officer Peter Rawlinson was jubilant at the time, saying in an interview shortly after the deal announcement: “We’ve been able to attract the bluest of blue-chip companies to make long-term investments in us, and I just see the SPAC as just a useful tool now to achieve that.” 

A representative for Lucid Group declined to comment on Wednesday.

Lucid had a market capitalization of about $32 billion as of Tuesday’s close, though it has yet to deliver a single car to customers. The company expects to build around 577 vehicles this year and ramp up production to 20,000 vehicles next year, but has not announced an official production start date. 

Saudi Arabia’s Public Investment Fund is the single largest shareholder in Lucid, according to data tracked by Bloomberg, and participated in the PIPE. The fund invested more than $1 billion in Lucid in 2018, prior to the SPAC deal, and has said regularly that it sees Lucid as a long-term part of the kingdom’s 2030 targets to diversify its economy.

PIPE investors collectively held 166.7 million shares when the deal closed in July. Blue-chip or not, some holders appeared to be putting a lid on their profits as they wait to see Lucid hit the road. 

©2021 Bloomberg L.P.

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