Lucid (NASDAQ:LCID) has enjoyed a pleasant 2022 so far, as the electric vehicle (EV) maker is up more than 8% year-to-date (YTD). After merging with special purpose acquisition company (SPAC) Churchill Capital IV last year, Lucid’s Air model went on to win the acclaimed MotorTrend Car of the Year award. However, shareholders of Lucid should keep in mind an upcoming catalyst that has the potential to affect LCID stock. On Jan. 19, the lockup period for existing shareholders of Lucid will expire.
According to the S1 form filed last August with the U.S. Securities and Exchange Commission (SEC), early shareholders of LCID stock will be able to offload their shares 180 days after the closing of the SPAC merger. This is a significant event because early Lucid shareholders make up a majority of Lucid’s ownership. Furthermore, the S1 notes that out of 1.61 billion shares outstanding, roughly 1.19 billion shares are held by Lucid shareholders. Therefore, investors should keep in mind that Jan. 19 will most likely be an extremely volatile day for LCID stock.
With that said, let’s dive into the implications of Lucid’s lockup expiration on Jan. 19.
LCID Stock: What to Know About the Lockup Expiration
- This isn’t the first lockup expiration for Lucid. On Sept. 1, the lockup period for private investment in public equity (PIPE) shares expired. As a result, shares of LCID stock fell by almost 11%.
- Lucid stock fell more than 22% the week prior to the September PIPE lockup expiration. Tomorrow, Jan. 12, marks a week before the Jan. 19 expiration, so investors may experience some price volatility during that period.
- The lockup expiration on Jan. 19 may present a buying opportunity. Shares of LCID stock traded more than 35% higher one month after the previous September lockup expiration. Furthermore, shares of LCID stock today are trading higher by over 145% when compared to the closing price on the PIPE lockup expiration day.
- The Saudi Public Investment Fund (PIF) is the largest shareholder of Lucid stock with a 67.2% stake. However, the fund has a long-term investment horizon, so investors are not anticipating a significant sale.
- The next lockup expiration date will fall on Jan. 23, 2023. On that day, Churchill sponsors will be allowed to sell their shares. According to the S-1 filing, Churchill sponsors own 51.7 million shares.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.