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Courtesy Lucid Motors

Investors in

Lucid

are set to have one of the difficult days that often happen among start-up electric-vehicle companies. The share were down 16% in early trading, while the

S&P 500

was up 0.2% and the

Dow Jones Industrial Average

was flat..

Life can be tough for investors in these companies. So many things can move the stock price significantly. Many of them have nothing to do with corporate fundamentals.

The issue Wednesday is the expiration of a stock-selling prohibition for investors in Lucid’s PIPE, or private investment in public equity. The PIPE lockup expired Wednesday.

Lucid became a publicly traded company, and raised more than $4 billion, by merging with a special-purpose acquisition company, or SPAC. PIPEs are a common feature of SPAC mergers. The Lucid PIPE raised about $2.5 billion of the total $4.4 billion the company received.

The quality of the PIPE investors–they can be large institutions–often improves investors’ perceptions about a SPAC merger. Lucid’s PIPE investors included accounts managed by

BlackRock

(BLK), Fidelity Management & Research,

Franklin Templeton,

Neuberger Berman, Wellington Management, and others.

PIPE investors own about 10% of the stock, based on recent filings. The PIPE stock was sold at about $15 a share, so those investors are sitting on nice gains. Lucid stock was at $16.84 in early trading.

Anytime a large block of stock becomes available to sell, shares can be weak. Investors, and traders, look to get out ahead of any selling by large shareholders. It can create a situation, where the fear of selling creates actual selling.

None of the PIPE shareholders have to sell, of course. They simply can sell now. Lucid wasn’t immediately available to comment on the PIPE, investors’ plans, or the lockup expiration.

Coming into Wednesday, Lucid stock was down about 7% over the past three months. The S&P has gained about 8% over the same span.

Other EV stocks have been weak too. The semiconductor shortage, which is constraining global auto production, together with a downbeat forecast from

General Motors

(GM) regarding its second-half 2021 earnings, seem to have taken some of the wind out of the sails of the sector.

Lucid plans to start making and delivering its first EV, the Lucid Air, later in 2021.

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