Actions of Lucid (NASDAQ:LCID) have grown more than 10% in 2022 so far, outpacing the benchmark S&P 500 drop of more than 2% with a good margin. However, it should be noted that January 19 marks a major catalyst for LCID stock shareholders. And unfortunately, the catalyst isn’t exactly a positive event.
The event? On January 19, the lockout expiration for existing Lucid shareholders 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 LCID shares. This is important because existing shareholders constitute the majority of Lucid’s ownership; there are currently 1.6 billion LCID shares outstanding. As a result, shareholders should expect January 19 to be an extremely volatile day.
Action LCID: block expires on January 19
The Saudi Public Investment Fund (PIF) is the largest inherited shareholder of Lucid shares. The Saudi PIF holds a 67.2% stake in LCID shares. Investors are therefore wondering if the fund plans to sell its shares on January 19 or later. However, the PIF is a long-term shareholder, so the fund is unlikely to sell. a large part of its investment.
The last lock-in expiration for Lucid was on September 1, 2021. On this day, Private as Public Equity Investors (PIPE) were allowed to sell their shares. As a result, LCID stock fell almost 11%. Worse still, Lucid fell more than 20% the week before the September PIPE block expired.
January 12 marks one week before the next expiration date. Since January 12, shares of LCID have fallen more than 7%. However, the January 19 expiry may present a potential downside buying opportunity. A month after the September expiration, Lucid traded more than 35% above its block-day closing price. Today, the stock is trading more than 135% above the September 1 closing price.
However, there is something else investors should know. In an amended 13G file received on January 7, the shareholder of PIPE Magnetar Financial sold 16.8 million shares of Lucid, or 94% of its position. Magnetar is an Illinois-based hedge fund that manages over $25 billion in discretionary assets under management (AUM).
Magnetar was an early supporter of Lucid and invested $250 million in the electric vehicle (EV) company in 2017. Additionally, Magnetar has already purchased an additional 10 million shares of LCID as an investor PIPE for $15 a share. After the recent sale, Magnetar now owns just over a million shares of LCID.
As of the publication date, Eddie Pan does not hold (directly or indirectly) any position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.