Why Lucid Stock Dropped 5.5% Today

What happened

rumors that An apple (NASDAQ: AAPL) You may rent start an electric car Lucid Group (NASDAQ: LCID) To make an Apple-branded electric car, it sparked a rally in the Lucid market on Friday. But you may remember that I warned you that this rumor seemed untrue, that Lucid’s stock wouldn’t actually rise to new heights, as the author suggested – and that “Lucid’s stock price hike won’t last long” in fact.

What a surprise. As of Tuesday afternoon, Lucid’s stock is down 5.5%, having given up all of Friday’s gains and more.

Big red arrow going down over the stock chart.

Image source: Getty Images.

so what

Why is Lucid deteriorating today? My strong suspicion is that it’s because of an article that appeared on auto news site – the same site that reported the original Apple-Lucid rumor – over the weekend. In that second article, Torque admitted that her first article was “highly speculative.” (The original article made no indication that it was speculative – “very” or otherwise). There was really no basis to believe that Apple was in the process of hiring Lucid, and therefore, there is no specific reason to expect Lucid’s stock to rise significantly either.

The second article also said something more than speculation: Tomorrow, January 19, “approximately 1.2 billion shares of Lucid Motors are about to open” and will become available for sale to the public.

What now

Torque says that this tidal wave of Lucid stock could cause the stock to become “extremely choppy” – another fact not mentioned in the original article – before speculating that adding new shares to the Lucid float could actually result in a “short” squeeze.

Suffice it to say that this rumor is also baseless. Conversely, making hundreds of millions of Lucid shares available for trading tomorrow seems likely to dampen demand for the stock and push the stock price down. And as a matter of fact, that’s the direction Lucid’s stock is headed today.

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Rich Smith does not hold a position in any of the stocks mentioned. Motley Fool is owned and recommended by Apple. Motley Fool recommends the following options: long March 2023 calls worth $120 on Apple and short March 2023 calls worth $130 on Apple. Motley Fool has a disclosure policy.

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