This week we have watched Lucid stock plummet roughly 18% on a couple bad headlines. Shares of the stock this morning are up about 2% as the latest information may turn things around slightly. Lucid, originally Atieva became public earlier in the year through a SPAC by Michael Klein. Since its announcement the symbol has rocketed from a low of $10 to a high just over $60 per share. Recently Churchill Capital Corp and Lucid combination have come under fire.
Does the SEC hate Electric Cars?
The SEC has launched an investigation into the combination of the SPAC. Lucid is not the only one, the SEC is investigating Lordstown, Workhorse, and Nikola to name a few. Supposedly this is in the name of protecting investors, but one starts to wonder as this news is always tough to swallow for investors. Does the SEC hate electric cars, probably not, the majority of them just utilize the loosely regulated SPAC process to IPO. On top of the SEC investigation Lucid reported a net loss of $524 million for the third quarter due to the increased cost of production.
To top off the pain, Lucid announced a debt sale of $1.75 billion convertible senior notes with an estimated proceed of $1.99 billion. The intention of the offering is for developments in green energy products for their electric cars and storage systems. The combination of these events really packed a punch against the stock. It peaked back towards $55 a share after successful deliveries in November.
While the debt sale price is still under adjustment, some positive news could be the conversion rate of $54.78. If this holds true that equals nearly a 50% value increase from today’s level. Since it is still under adjustment, expect further turbulence if the conversion rate drops.
Lucid vehicles have started to deliver and they sure are amazing to see. As more vehicles come out, we would expect further hype of the carmaker. A key to the new EV companies is reservations and deliveries. With the pain of supply chain issues creating havoc for all automakers any delivery is tough to complete.
SPACS are Volatile
Overall, Lucid is a very new company to the public market and still has a lot to prove. It will be exciting to see the growth of the company over time, it is one of the largest backed automakers out there. Investors are hoping that it’s the new Tesla to reap huge gains. SPAC volatility is nothing new, we have seen companies with high hopes crash down with force. PTSD must rattle holders of stocks that have felt such demise. With all the fingers crossed and eyes closed it seems investors are itchy on the sell fingers.
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