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Lucid shares drop following SEC subpoena

Yahoo Finance Live hosts break down Lucid's shares dropping after the SEC subpoenas the EV manufacturer regarding its shell company merger.

Video transcript

JULIE HYMAN: We've got to talk about-- speaking of SEC investigations, by the way, let's talk about Lucid as well. The company getting a subpoena from the Securities and Exchange Commission. Those shares are down by 14%.

And again here details are somewhat sketchy, but the company said in the filing the probe appears to concern its combination with Churchill Capital Corp IV, the special-purpose acquisition company it completed a deal with before its stock-market debut in July.

And, Brian Cheung, Lucid-- you know, we obviously have had a lot of these electric-car companies that have been getting some extra scrutiny since they came public through SPAC deals and otherwise. Lucid is one that hadn't, necessarily, until now.

BRIAN CHEUNG: Yeah, I was going to say, I mean, first of all, we have to acknowledge that the folks over at the SEC apparently have had a very busy weekend, obviously, trying to look into all these EV companies at one time.

But yeah, I mean, basically what we know-- and it wasn't a very substantial 8-K that Lucid filed. It was only a few sentences, but the company had received a subpoena requesting the production of certain documents, and it appears, based off of what the company said in the 8-K, appears to concern the business combination between Churchill Capital, which was the SPAC that helped them go public, and Atieva, which I believe is just the former name for Lucid.

JULIE HYMAN: Yeah, that's what Lucid was known as before, exactly.

BRIAN CHEUNG: Exactly. Right And it concerns certain projections and statements. So I think a lot of people might be trying to kind of draw connections to the BowX acquisition company, their SPAC news that we had gotten later in the week last week.

But again, we don't have any more details beyond exactly what I just shared right now. So it does underscore, though, that types of-- these types of financial filings, especially for these very lofty, kind of ambitious types of business models, is definitely going to be something that not just the companies that are trying to go public through SPACs are trying to deal with in terms of what is the proper way to model out these types of projections to prospective shareholders but how the SEC is supposed to be policing them.

So again, I'm not trying to say this is a Theranos-type situation, but it shows that there's a lot of ambiguity around how you do this type of forecasting and what the proper due diligence is when you offer those forecasts up to the shareholders. But again, we'll get more details on exactly what the regulatory problems are here. That might offer a little bit more insight into really who's to blame here.

BRIAN SOZZI: And I'll quickly add too, [? outside ?] you never want the SEC snooping around your house. One, you know, does this distract management from reaching its very ambitious production targets? You know, they're expected to go from 520 vehicles being made this year and they want to ramp that up to 20,000 next year. Are they distracted by this?

And then secondarily, does this hurt their chances to raise more capital? Lucid has not hidden the fact they are going to have to need more capital to get eventually their SUV to market here. But if you're out there trying to raise money, you're going to get asked questions about this SEC investigation, and it may prevent you from getting the capital you need to take your production to the required levels just to meet some of the aggressive targets they've put out.

JULIE HYMAN: Yeah, that's a good point.