Are the Feds involved? Oh yeah.
This is not how the Lucid Group wanted to end things for the year. Shares of all-electric luxury vehicle startup took a nosedive by as much as 19.5 percent during trading today (Monday) after it disclosed that the US Securities and Exchange Commissions (SEC) has opened a probe into its SPAC deal which lead to it going public last July.
The Feds are "requesting the production of certain documents related to an investigation… [specifically] the business combination between the company and Atieva, Inc. and certain projects and standards." Atieva was the special purpose acquisition company (SPAC) Lucid combined with to become a publicly-traded company. Lucid said in an official statement it is fully cooperating with the SEC review.
Investors are still worried, as Lucid's tumbling stock value clearly shows. Deliveries of the first batch of the Lucid Air sedan, which received a very impressive 520-mile range rating by the EPA, got underway in late October. It's also been expanding its North American dealership network. But the fact that the SEC is investigating doesn't look good.
The agency has investigated other EV startups that have gone public via SPAC deals, including Canoo, Lordstown Motors, and, perhaps, the most infamous of them all, Nikola. Nikola's CEO and co-founder, Trevor Milton, was forced to resign and is now facing possible jail time for alleged fraud.
Opting for a SPAC route instead of the traditional IPO has become popular - especially for EV startups - because they offer a faster and cheaper way to go public. Investors like them because they get easier access to potentially high-value companies. Companies who've chosen the SPAC method are often more inclined to highlight big financial projections as selling points. Until now, Lucid was doing quite well with a market capitalization of almost $78 billion. Yes, that's in the same neighborhood as GM and Ford.
Additional details of the SEC's Lucid Motors probe remain under lock and key for now, but investors are going to want some answers sooner rather than later.