How is the next Lucid Group Blocking Period (LCID) expiration likely to play out


Lucid group (NASDAQ: LCID), a retailer of luxury electric vehicles as well as advanced battery technologies, is facing an onslaught of the FUD (fear, uncertainty and doubt) narrative as the stock freeze expires.

As a reminder, Lucid Motors had officially closed its merger agreement with SPAC Churchill Capital Corp. IV (CCIV) on July 23, 2021. Certain shares of the merged entity – now officially known as Lucid Group – were then subject to a customary blocking period of 180 days. While the blockade of PIPE shares ended in September 2021, Lucid Group’s founding shares will remain subject to blocking restrictions until January 19, 2021, corresponding to 180 days since the closing of the merger agreement.

Lucid Group (LCID) shareholders to benefit from a deluge of liquidity and increased coverage from analysts now that the stock is heading towards inclusion in the Nasdaq-100 index

So why are investors dreading this approaching stage? Well, the Saudi PIF, which is the largest investor in Lucid Group with a 62.7% stake, owns the bulk of these founding shares through its subsidiary, Ayar. Some investors fear that the Saudi PIF may take advantage of the relatively high share price of Lucid Group to get rid of its holdings. Let’s dig deeper into how this event is likely to unfold.

First, investors should understand that the Saudi PIF is a long-term investor and is unlikely to be motivated by short-term moves in Lucid Group shares. Why would the fund decrease its hold on the company at a time when the stock is poised to experience explosive growth over the next few years?

Second, Lucid Group is currently the cornerstone of Saudi Arabia’s grand transformation strategy. As we have detailed in some of our previous articles (read here), Saudi Arabia’s Vision 2030 aims to locate at least half of the vehicle import volume in 2019, creating a huge opportunity for Lucid Group. and other automakers. In 2019, the Kingdom imported vehicles worth $ 12.5 billion. This means that by 2030, the Kingdom aims to produce at least $ 6.25 billion in cars locally. While the Saudis have negotiated with a number of automakers to establish manufacturing units at a dedicated hub on the Kingdom’s west coast, only Lucid Group is currently at an advanced stage of doing so. Namely, the company is expected to establish a $ 3 billion manufacturing plant in Saudi Arabia by 2024. The Saudi Standards and Metrology Authority, as well as the Kingdom’s Minister of Investments, have made public statements to this. respect. In this context, why would the Saudis want to decrease their influence over the company by selling shares ahead of the planned finalization of this highly anticipated manufacturing plant in the Kingdom?

Peter Rawlinson Convertible Notes and Stock Liquidation: Let’s Get to Lucid Group’s Budding FUD Story (LCID)

In addition, the Kingdom continues to display the Lucid Air EV on various forums, proud of the significant participation that the Saudi PIF still maintains in Lucid Group. By way of illustration, look no further than the fifth edition of the Future Investment Initiative Forum held at the King Abdulaziz International Conference Center in Riyadh. The venue showcased Lucid Air electric vehicles at a prime location (see images in the report here), further strengthening the company’s first-mover advantage.

Therefore, while a liquidation for the purposes of global portfolio rebalancing is to be expected, it is unlikely that the Saudi PIF will divest any significant portion of its stake in Lucid Group anytime soon. Therefore, the emerging FUD narrative around the stock is largely devoid of realities on the ground.

Keep in mind that Lucid Group stocks experienced prolonged weakness around the expiration of the PIPE stock lock-in period in September. A somewhat similar but transient weakness is also to be expected this time around.

Looking ahead, while we don’t yet know how many Lucid Air Dream Edition EVs have been delivered against a set target of 520 units before the end of 2021, there are signs that Lucid Group has been successful in doing so. significant progress.

Of course, the exact number of deliveries should now be revealed when Lucid Group announces its next quarterly results.

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