Shares of electric-vehicle startup Lucid were dropping after the company said it received a subpoena from the Securities and Exchange Commission, leaving investors scrambling to decide what’s going on and what are the long-term risks, if any, to the stock.
Even if Lucid (ticker: LCID) isn’t impacted in the long run, it’s another reminder to investors that the SEC is taking a closer look at special purpose acquisition companies, better known as SPACs.
Lucid shares were down almost 16% in premarket trading. S&P 500 and Dow Jones Industrial Average futures were up 0.4% and 0.5%, respectively.
A news release from the company said the subpoena arrived on Dec. 3, but doesn’t offer too much additional detail.
“Although there is no assurance as to the scope or outcome of this matter, the investigation appears to concern the business combination between the Company (f/k/a Churchill Capital Corp. IV) and Atieva, Inc. and certain projections and statements,” read a portion of the short release.
Lucid, which was called Atieva early on, became a publicly traded company by merging with a SPAC called Churchill Capital. Stock in the Churchill-SPAC traded wildly before the merger announcement, going from $10 a share back in January to more than $60 in a few weeks.
The merger between Lucid and Churchill was announced in late February.
The merger announcement was also accompanied by a presentation with financial projections for Lucid. That is typical in SPAC mergers.
Exactly what the SEC is looking for just isn’t known. The SEC could be looking at trading in the Churchill SPAC, at Lucid’s projections or projections that accompany SPAC mergers as a whole. Lucid didn’t return a request for comment. The SEC declined to comment on the reasons it issued the subpoena.
Without more detail, Lucid investors will be left in the dark. Investors hate that, which Monday’s early trading action shows.
The Defiance Next Gen SPAC Derived exchange-traded fund (SPAK) ETF isn’t trading in the premarket Monday yet. SPAC investors should pay attention to that ETF to see how all SPACs react to the Lucid news.
Write to Al Root at [email protected]
