Shares of Lucid (NASDAQ:LCID) are up more than 10% in 2022 so far, beating the benchmark S&P 500’s decline of over 2% by a healthy margin. However, it should be noted that Jan. 19 marks a major catalyst for shareholders of LCID stock. And unfortunately, the catalyst isn’t exactly a positive event.
The event? On Jan. 19, the lockup expiration for existing shareholders of Lucid will expire. According to a filing submitted to the U.S. Securities and Exchange Commission (SEC), existing or legacy Lucid shareholders own 1.19 billion shares of LCID stock. This is significant because existing shareholders make up a majority of Lucid’s ownership; there are currently 1.6 billion shares of LCID stock outstanding. As a result, shareholders should anticipate Jan. 19 to be an extremely volatile day.
LCID Stock: Lockup Expiration on Jan. 19
The Saudi Public Investment Fund (PIF) is the largest legacy shareholder of Lucid stock. The Saudi PIF owns a 67.2% stake in LCID stock, so investors are wondering if the fund plans on selling its shares on or after Jan. 19. However, the PIF is a long-term shareholder, so the fund will most likely not sell a significant portion of its investment.
The last lockup expiration for Lucid occurred on Sept. 1, 2021. That day, private investment as a public equity (PIPE) investors were allowed to sell their shares. Accordingly, LCID stock fell by almost 11%. Even worse, Lucid fell by more than 20% the week prior to the September PIPE lockup expiration.
Jan. 12 marks one week before the upcoming expiration date. Since Jan. 12, shares of LCID stock have declined by more than 7%. However, the Jan. 19 expiration may present a potential dip-buying opportunity. One month after the September expiration, Lucid traded more than 35% higher from its lockup day closing price. Today, the stock trades more than 135% above the Sept. 1 lockup day closing price.
There’s something else investors should know, however. In an amended 13G filing received on Jan. 7, PIPE shareholder Magnetar Financial sold 16.8 million shares of Lucid, or 94% of its position. Magnetar is a hedge fund based in Illinois that manages over $25 billion in discretionary assets under management (AUM).
Magnetar was an early supporter of Lucid and invested $250 million into the electric vehicle (EV) company back in 2017. Furthermore, Magnetar once purchased an additional 10 million shares of LCID stock as a PIPE investor for $15 per share. After the recent sale, Magnetar now owns just over 1 million shares of LCID stock.
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.