Shareholders of Lucid (NASDAQ:LCID) should be pleased that LCID stock is positive on the day. That’s because the lockup period for legacy shareholders of Lucid expires today, Jan. 19. This is a significant event because legacy shareholders of Lucid own 1.19 billion shares out of 1.61 billion shares outstanding. Interestingly enough, the volume for LCID stock today is trending near its daily average. So, what implications does the lockup expiration have for Lucid?
LCID Stock: Lockup Expiration Day Is Today
Shareholders were expecting a volatile day for LCID stock today, and rightfully so. Shares traded in the premarket in the low-$39 range and are now trading at the $41 level, up more than 5%. Furthermore, today’s daily volume is trending near its daily average, signaling that legacy Lucid shareholders are not selling out en masse. However, this simply implies that legacy shareholders are choosing not to sell today. Those same legacy shareholders can choose to sell at any time in the future.
For example, the previous lockup expiration for private investment as a public equity (PIPE) shareholders occurred on Sept. 1. However, PIPE shareholder Magnetar Financial decided to wait until the end of the year to cut its Lucid position by 94%. Magnetar was an early backer of Lucid and invested $250 million into the electric vehicle (EV) maker in 2017. The financial firm also purchased an additional 10 million shares of LCID stock for $15 per share as a PIPE investor.
Fans of Lucid will also be monitoring the Saudi Public Investment Fund (PIF). That’s because the PIF is the largest legacy shareholder of LCID stock with a 67.2% stake. However, the PIF usually holds investments for long periods of time, so investors are not anticipating a major sale.
What’s Next For Lucid After Today’s Lockup Expiration?
During the previous Lucid lockup expiration for PIPE shareholders, shares of LCID stock fell by more than 20% the week prior to the expiration date. Similarly, LCID stock fell more than 13% from Jan. 11 to Jan. 18. However, one month after the PIPE expiration, Lucid traded 35% higher. Today, LCID stock trades more than 130% higher relative to its PIPE expiration day closing price. While this doesn’t signify that Lucid will trade 35% higher a month from today, it’s interesting to note how the stock performed after a similar event.
The next expiration date 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. Since Churchill sponsors own significantly less shares than legacy Lucid shareholders, the next expiration event should not be as notable as the one today.
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.