What’s going on with Lucid Motors (NASDAQ:LCID) stock today? Shares of the electric vehicle (EV) maker are down 4% as the S&P 500 declines by over 1.5%.
Shareholders of LCID stock are expecting a major price catalyst tomorrow. According to a filing submitted to the U.S. Securities and Exchange Commission (SEC) last November, the lockup expiration for legacy shareholders of Lucid will expire 180 days after the closing of the special purpose acquisition company (SPAC) merger. That day is tomorrow, Jan. 19. With that said, let’s dive into the implications of the lockup expiration.
LCID Stock Faces Lockup Expiration on Jan. 19
Tomorrow, legacy Lucid shareholders will be able to sell their shares. This event has the potential to make for some volatile moves, as legacy Lucid shareholders own 1.19 billion shares out of 1.61 billion shares outstanding.
The Saudi Public Investment Fund (PIF) is the largest legacy shareholder of Lucid stock. In addition, the PIF owns a massive 67.2% stake in Lucid, so any significant sale would likely affect the stock price. However, the PIF is regarded as a long-term investor, so investors are not anticipating a major sale.
Lucid’s Lockup Expiration Could Present a Buying Opportunity
Fans of Lucid will likely remember the previous private investment as public equity (PIPE) lockup expiration that occurred on Sept. 1. On that day, shares of LCID stock fell by almost 11%. In addition, shares of LCID fell by more than 20% the week prior to the lockup expiration date. Jan. 12 marks one week before the Jan. 19 lockup expiration, and shares of LCID have declined by more than 11% since then.
However, the price narrative for Lucid changed dramatically after the Sept. 1 lockup expiration. One month after the expiration, Lucid traded 35% higher. Today, shares of LCID trade more than 125% higher when compared to its lockup day closing price. However, investors should note that just because the price of Lucid stock increased after the last expiration does not mean that it will happen again.
Moreover, Lucid currently has a short interest of 15.81% of its float. With such a high short interest figure, the probability for a short squeeze is heightened.
Finally, the next lockup expiration for Lucid will fall on Jan. 23, 2023. On that day, Churchill sponsors will be allowed to sell their shares. According to the updated 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.
