Lucid Stock Takes a Tumble. Why? Look at the Shareholder Mix.

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A sudden drop in

Lucid Group
’s
stock price highlights a key investing insight: Shareholder mix matters. The electric-vehicle maker’s shares (ticker: LCID) fell 6.3% Tuesday, while the

S&P 500
was off 0.6%. News that Lucid is about to raise capital—a development that had long been in the cards—seemed to be behind the fall.

Lucid filed a universal shelf registration statement that allows it to raise up to $8 billion via any combination of stock, preferred shares, warrants, and debt. That’s a lot, but the registration statement doesn’t mean a huge stock sale is imminent. Companies have limits on what securities they can sell without telling their owners—shareholders—first. Shelf registrations give them the ability to raise money when management believes the time is right.

The best explanation for the reaction to Lucid’s relatively routine filing might be that the stock is a favorite of individual, rather than institutional, investors. Individuals tend to be less familiar with capital-market technicalities than big players. They hold about 70% of Lucid’s available shares, based on Bloomberg data, while institutions have the rest. That’s high. Comparable numbers for

Tesla

and

Microsoft

are 45% and 25%, respectively.

It’s no surprise that Lucid will need more capital. Wall Street projects that the company will burn through roughly $7 billion over the next two years, while it ended the second quarter with some $4.3 billion on the books. Tesla used roughly $9 billion before it began generating free cash flow. Lucid stock is off about 60% this year, while the S&P 500 and

Dow Jones Industrial Average
are down about 15% and 12%, respectively.

Last Week

Payroll Shock

Stocks fell after Jerome Powell’s hawkish Jackson Hole talk, with indexes off 4% or more as August closed. The dollar rose, and job openings ticked up. Bed Bath & Beyond and Snap laid off 20% of workers, and Nvidia warned on sales after new U.S. restrictions on chips to Russia and China. Covid flared again in China. The big news: August jobs came in at 315,000, off from July but strong enough to stir rate-hike fears. On the week, the Dow industrials fell 2.99%, to 31,318.44; the S&P 500 shed 3.29%, to 3924.26; and the

Nasdaq Composite
sank 4.21%, to 11,630.86.

Ukraine Offensive Begins

Ukraine began its long-awaited offensive around Kherson, attempting to cut off Russian troops on the western side of the Dnipro River. United Nations inspectors visited the beleaguered Ukraine nuclear plant amid the fighting. Exxon Mobil sued Russia, claiming the Kremlin had blocked its exit from its 30% stake in the Sakhalin-1 oil project. Russia again shut off the Nord Stream 1 gas pipeline. In a compromise, the European Union agreed to suspend Europe’s visa pact with Moscow but allow some Russian tourism.

Pakistan Under Water

Pakistan sought U.N. emergency aid after monsoon rains inundated the country, flooding as much of a third of it. Over 1,200 have been killed and a million homes destroyed. The IMF offered a $1 billion loan.

Artemis Delayed

NASA delayed launching its new, 38-story Space Launch System, Artemis I, until Saturday after a problem with engine cooling lines. Boeing is the biggest contractor on the SLS, the largest rocket NASA has ever built and meant to take men back to the moon. “You don’t want to light the candle until it’s ready to go,” said NASA chief Bill Nelson.

Inside Those Boxes

The Department of Justice, responding to former President Trump’s demand for a special master to examine documents taken from Mar-a-Lago in an FBI raid, accused Trump’s team of obstruction of justice. The DOJ filing detailed the timeline of attempts to retrieve the material as well as the haul from the raid: 33 boxes containing more than 100 classified documents.

Annals of Deal Making

Illumina won its case against the Federal Trade Commission trying to block its $7.1 billion acquisition of cancer screener Grail…Honda and LG Energy Solution said they would spend $4.4 billion to build a lithium-ion battery plant in the U.S., probably near Honda’s Ohio manufacturing operation…Delaware Chancery Judge Kathaleen St. J. McCormick ordered Twitter to hand over to Elon Musk an analysis of some 9,000 accounts it surveyed last year…Meta Platforms reached a settlement over Cambridge Analytica’s harvesting of Facebook data for political ads. Terms weren’t disclosed. Meta has already paid a $5 billion FTC fine in the case.

Write to Al Root at [email protected]