Lucid Motors Received a Subpoena From the SEC After Closing SPAC Deal

After a successful SPAC merger with Churchhill Capital Corporation, Lucid Motors stock has dropped nearly 20 percent after the company was subpoenaed by the SEC.

Robin Hill-Gray - Author

Dec. 6 2021, Published 2:37 p.m. ET

Lucid Motors VP Peter Rawlinson
Source: Getty Images

Lucid Motors, the company seeking to rival Tesla, has received a subpoena from the SEC. Lucid Motors emerged slightly out of its fluctuating stock positions, but now it seems to be back to square one.

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Since receiving the SEC subpoena, Lucid Motors (LCID) stock has dropped significantly as investors watch to see why the SEC has launched an investigation and what it will reveal.

Lucid Motors
Source: Lucid Motors

Lucid Air model

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Lucid Motors's completed a SPAC merger.

In February, Lucid Motors planned to go public with Churchill Capital Corporation in a SPAC merger. The deal gave $4.4 billion to Lucid, which boosted the company's value to $24 billion. The valuation boost made the deal one of the biggest with a SPAC. According to CNBC, “A special-purpose acquisitions company is essentially a shell company set up by investors with the sole purpose of raising money through an IPO to eventually acquire another company.”

At the time of the merger, the company hadn't started production yet but planned to make deliveries of its first car, the electric Air, starting at $160,000 towards the second half of this year. The plan also includes a cheaper version at $70,000. The company reportedly had a little over 10,000 preorders for the Air model.

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The Air has a battery range of over 500 miles, which beats the longest-range version of the Tesla Model S, according to The Wall Street Journal. Lucid Motors reached 11 percent on its first day of trading following the merger. Lucid closed at $26.83 on July 26 and Churchill Capital Corporation ended at $24.25 on July 30.

TechCrunch Disrupt 2017
Source: Getty Images

VP of Lucid Motors Peter Rawlinson (L) speaks at TechCrunch

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The SEC has issued a subpoena to Lucid Motors.

The company has received a subpoena from the U.S. SEC. The SEC released a report that stated, “On December 3, 2021, Lucid Group, INC received a subpoena from the SEC requesting the production of certain documents related to an investigation by the SEC. 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 (Churchill Capital Corp) and Atieva, Inc. and certain projections and statements.”

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Since the announcement of the subpoena, the company shares dropped by nearly 20 percent. The specific issues the SEC has with the SPAC deal haven't been released yet. The company is reportedly in full compliance with the investigation. So far, Churchhill Capital Corporation has declined to comment.

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SPACs have been popular and controversial.

Source: YouTube

"Lucid Motors to go public via SPAC"

The Lucid Motors merger follows a trend of SPAC popularity. According to an analysis by the University of Pennslyvania’s Wharton School of Business, SPACs have raised more than $100 billion in 2021 (as of March 2021) compared to last year at $83 billion. In comparison to IPOs, SPACs can be a cheaper alternative.

Wharton's analysis stated, "The SPAC route is the only viable way for firms to both raise capital and acquire a public listing in a fairly short period of time.” But when it comes to Lucid Motors, pending concerns have been that the company, like others, is not yet fair enough to be deemed “a viable company.” Whether or not this concern holds weight will be determined as the investigation continues.


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