Shares of Lucid (LCID) soared as much as 88% on Friday and were repeatedly stalled on volatility following speculation that Saudi Arabia’s Public Investment Fund (PIF) is considering buying a remaining stake in the luxury EV startup.
The spike came after a potential deal notice from the Betaville website. Shares closed up 43%, their biggest one-day gain on record.
The stock’s parabolic move was likely exacerbated by investors covering short positions.
“Lucid’s voice really underscores the risk of getting involved in EV stocks at the moment,” Garrett Nelson, vice president and senior equity analyst at CFRA Research, told Yahoo Finance.
“Short interest across the space has surged and is at dangerously high levels after a disastrous year of EV stock performance, making stocks like LCID prone to short squeezes (LCID’s current short interest is over 25% of the float).”
The PIF already owns 65% of Lucid, which produced 7,180 vehicles in 2022.
“If the Saudis bought the rest of the company, we think it would likely invest more heavily to fix the operational issues that have limited its production growth and would likely provide a greater degree of profitability for the company in the long run,” he said. Nelson.
The analyst notes that LCID was only producing vehicles at a rate of about 38 units per day, “which is nowhere near reaching mass production.” By comparison, Tesla’s Q4 production rate (TSLA) was 4,779 units/day.
Lucid is up 86% since early January amid a broader rally in EV stocks. Last year, Lucid shares fell more than 80%, underperforming the broader market.
Yahoo Finance has contacted Lucid and has not received a response as of posting.
Ines is a senior corporate reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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