Why Are Lucid Shares Rallying Today?

One big risk with investing in companies going public through mergers with special purpose acquisition companies (SPACs) is that early investors can bail out after a prearranged lock-up period ends. Today, shares of Lucid Group (NASDAQ: LCID) are rallying after one of those lock-up periods expired last night. After a spike of more than 7% in early trading today, Lucid stock was trading up 4% as of 10:31 a.m. ET. 

Early shareholders were required to hold the stock for 180 days after the closing of its SPAC merger. According to the S-1 filing with the U.S. Securities and Exchange Commission (SEC), 1.19 billion shares were released from that holding period last night. One large shareholder of Lucid stock is Saudi Arabia's sovereign wealth fund. The Saudi Public Investment Fund (PIF) holds a 62.7% stake in Lucid Group, and a mass sale could have pummeled the stock. But it appears the PIF is one stakeholder that has plans to be in for the long term. 

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Source Fool.com