What happened
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 (LCID -1.24%) 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.
So what
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.
Image source: Lucid Group.
Now what
It shouldn't come as a surprise that the Saudi investors are holding shares in the premium electric vehicle maker. In its SEC filing, Lucid discussed its international expansion strategy, saying, "As part of this strategy, our business plan contemplates manufacturing facilities in Saudi Arabia and China."
It has since been reported that concrete plans are in the works for Lucid to develop its business in Saudi Arabia, including building a manufacturing plant. With the Saudi investors holding shares beyond the expiration period, other investors are taking it as another sign that Lucid will continue its long-term expansion plans with the support of a major investor.
