The shares of Lucid Group (LCID.O) rose 43% on Friday, trimming gains after tripling on financial speculation. Saudi Arabia‘s Public Investment Fund (PIF) sought to take out the electric vehicle company after the EV maker Lucid rises on the report.
The conjecture sprang from an “uncooked” notice ascribed to the trade website Betaville, which uses market gossip as its word. Mid-afternoon, Lucid was the 6th traded stock on US markets and the third-largest mover on the Nasdaq.
The PIF, the sovereign wealth fund which controls more than 65% of Lucid, based in Newark, California, did not react quickly to a request for comment. Lucid did not respond.
PIF was keen to take Tesla private in 2018, but the deal fell through. Elon Musk, the CEO of Tesla, is on trial for allegedly deceiving investors with his tweet “financing secured” for the company’s takeover.
After supplying 4,369 vehicles last year, Lucid has been battling to supply its elegant Air luxury EVs.
With Tesla’s price reduction, money-losing U.S. businesses like Rivian Automotive Inc (RIVN.O) and Lucid may find it difficult to gain market share in an industry. The reason behind this is consumer wallets are dwindling.
Lucid has a $1.6 billion short interest
Lucid’s short interest is roughly 37% of its total float, whereas Tesla’s is only 3.5%. Nonetheless, Lucid’s short interest amounts to approximately $1.6 billion, compared to Musk’s vehicle maker’s $15.01 billion.
Short sellers suffered a $685 million mark-to-market loss when Lucid’s shares surged on Friday, according to analytics firm S3 Partners. However, losses occur only when short sellers finish out their positions.
Ihor Dusaniwsky, managing director of S3, talked about the EV maker Lucid rises on the report. He stated: “As Lucid short sellers’ mark-to-market deficits mount, we can predict short covering to begin in earnest after today’s short-side bloodbath.” He said this by emphasizing how popular the trading position has become.
One long-short fund manager, who had no prior exposure to Lucid, stated that he decided to short it because he believed the surge was mainly due to rumors.
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