Dear LCID stock fans, mark your calendars for a catalyst on January 19th

As the first week of 2022 draws to a close, the electric vehicle (EV) industry has already seen its fair share of turbulence. The week started with a lot of momentum in the sector as an industry leader You’re here (NASDAQ:TSLA) reported better-than-expected delivery results for the last quarter of 2021. However, since then, several electric vehicle inventories have fallen. The list of market losers today includes names such as Rivien (NASDAQ:RIVN) and Fisker (NYSE:RSF). However, Lucid engines (NASDAQ:LCID) has increased today and for most of the week. An important event is approaching, however, which could cause the LCID stock to drop.

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What happens with the LCID stock

First of all. Right now, the LCID stock is performing well, especially compared to some of its EV peers. It’s up nearly 5% so far today, and even with yesterday’s decline, it’s still up 0.63% for the week. Despite being down for the month, the stock’s gains over the past six are still impressive, topping 50%. Lucid is a clear beneficiary of the electric vehicle boom of 2021.

Now on the road ahead. In late December, users began to speculate on an important date for Lucid shareholders – the end of the company’s lock-in period. While the topic hasn’t garnered much attention on social media, it’s certainly worth discussing. This is because, as a user underline, January 19, 2022, will mark the end of the next blocking period, allowing early investors to offload LCID shares.

A quick review of documents filed by the company with the U.S. Securities and Exchange Commission (SEC) confirmed that the discussion on Twitter was correct. According to article 5.04 of the company regulations Amended and restated regulations, “Lock-in Period means the period beginning on the Closing Date and ending at 11:59 pm Eastern Time on the date that falls 180 days after the Closing Date. “

According to a Prospectus Supplementt provided to investors after the company filed for registration with the SEC, the first holders of Class A common stock were not allowed to unload shares until Jan. 19, 2022. That’s exactly 180 market days after the initial close of the transaction, as set out in the regulations.

Why is this important

These types of lock-in arrangements are common for companies like Lucid that have chosen to debut on the stock exchange through a Special Purpose Acquisition Company (SPAC) merger. And while the recent performance of LCID stock has been good, some of the early investors will likely take the opportunity to get rid of stocks, especially since slower growth has been planned for the electric vehicle sector in 2022.

This is not good news for Lucid, as withdrawing investors will likely cause stock prices to fall. Indeed, we have already seen this. At the end of the company’s first lock-up period in early September 2021, LCID stock fell almost 11%. With that in mind, it quickly bounced back, as the company had several exciting catalysts coming up that helped reignite momentum. Markets are still very uncertain in 2022, but investors have reason to view Lucid with optimism. One CitiGroup an analyst recently issued a one-year price target of $ 57 on the stock with a buy rating. The company is also considering expansion into European markets.

What this means for LCID stock

As we saw earlier, LCID stock will likely drop on January 19 as investors pull out. Also, it will likely drop before that in anticipation. That said, it will likely bounce back quickly, just like it was the first time around.

Investors should prepare for the turmoil as Lucid plunges later this month, but they shouldn’t panic. If anything, this may turn out to be an opportunity to buy the downside.

At the time of publication, Samuel O’Brient had (directly or indirectly) no position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.

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