Lucid stock hit by $1 billion insider trading activity

The electric vehicle market has seen a flurry of activity in 2024 — spurred on by an intensified contest between trailblazer Tesla (NASDAQ: TSLA) and increasingly competitive Chinese rivals best exemplified by BYD (SHE: 002594).

That’s not to say that the major players have cornered the market — recent years have seen an abundance of smaller competitors pop up, each angling to secure a niche or stable market position.

Lucid Group (NASDAQ: LCID) is one such automaker — having chosen to focus on luxury electric vehicles. Although the company’s latest vehicle delivery and production numbers released on October 7 showed impressive growth, the LCID shares have actually seen a price reduction since then.

At press time, Lucid stock was trading at $2.26 — having shed 34.06% in price over the last 30 days, bringing year-to-date (YTD) losses to 45.42%.

However, a massive insider purchase occurred recently, signaling that major players still believe in the long-term prospects of the luxury automaker.

Saudi Public Investment Fund buys $1 billion in LCID stock

The Ayar Third investment company, an arm of the Saudi Sovereign fund, invested roughly $1 billion to purchase a large quantity of LCID shares, per a recent SEC Form 4 filing.

Two transactions were executed — on October 30, 374,717,927 units of LCID stock were purchased at a price of $2.591 apiece. A day later, on October 31, an additional 21,470,459 stocks were bought at the same price.

The first transaction was worth $970,894,148, while the second is valued at $55,629,959 — for a combined total of $1,026,524,107. This has brought the Saudi fund’s ownership stake in the company up to 64.31%.

Can LCID stock recover from its current drop?

Although this is quite a strong sign of trust from the Saudi sovereign fund, markets haven’t reacted with optimism. 

Lucid is facing significant issues on several fronts — it has had to slash the prices of its flagship Air luxury model several times to improve sales, CEO Peter Rawlinson has previously cautioned against overreliance on the Saudi fund, and worries about share dilution continue to increase.

There are a few positive signs, however — the upcoming release of the company’s Gravity SUV could prove to be a bullish catalyst. For investors with a high risk tolerance and long time horizon, buying the dip on Lucid stock could prove to be beneficial in the long run, although Wall Street remains skeptical on average.

Featured image:
Around the World Photos, Scottsdale, Arizona — December 25, 2022, Digital Image. Shutterstock.