Why Lucid shares tanked 10% on Wednesday

Lucid Motors (LCID) shares closed more than 10% lower on Wednesday at $17.79 a piece. The stock was under pressure because a lockup period expired for some of the electric vehicle company's big investors.

PIPE shareholders, which stands for private investment in public equity, are allowed to sell for the first time since Lucid went public via a SPAC in July. Shares fell as much as 19% during Wednesday's session, their lowest price since listing on the Nasdaq.

Lucid is backed by Saudi Arabia’s sovereign wealth fund, BlackRock funds, Fidelity Management & Research, and Franklin Templeton.

The company has been on watch by traders even prior to its announcement to go public. Churchill Capital IV, the blank check company it merged with became popular among retail traders in February. The SPAC's stock surged 30% after a report of the nearing merger.

Lucid and Churchill Capital IV completed their tie-up and started trading under the ticker symbol LCID on July 26. That day LCID closed at $26.83.

Lucid Motors is seen as a potentially formidable player in the electric luxury sedan space. The company's CEO and CTO Peter Rawlinson was the chief engineer at Tesla (TSLA) for the model S prior to joining Lucid in 2013.

The EV maker placed its first US production factory in Casa Grande, Arizona. The company aims to meet its goals this year for two versions of its most expensive vehicle, the Air Dream Edition.

On June 26, Lucid openeda showroom in New York City's trendy meat packing district, just blocks away from Tesla's showroom.

Ines is a markets reporter covering stocks from the floor of the New York Stock Exchange. Follow her on Twitter at @ines_ferre

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