EV maker Lucid raises report Saudi PIF to buy remaining stake

Jan 27 (Reuters) – Lucid Group’s ( LCID.O ) shares surged 43% on Friday, paring gains after a doubling of market speculation that Saudi Arabia’s Public Investment Fund (PIF) wanted to buy out the electric car maker.

The speculation stems from an “uncooked”[ads1]; alert attributed to deals website Betaville, which uses the term for market gossip. Lucid was the sixth most traded stock on US exchanges and the third most traded on the Nasdaq by mid-afternoon.

PIF, the sovereign wealth fund that owns more than 65% of Newark, California-based Lucid, did not immediately respond to a request for comment. Lucid declined to comment.

In 2018, PIF was interested in taking Tesla private, but the deal did not materialize. Tesla CEO Elon Musk is on trial for allegedly misleading investors with his “secured funding” tweet to take the company private.

Lucid has struggled to deliver its sleek Air luxury EVs after delivering 4,369 vehicles last year.

With Tesla’s price cuts, money-losing U.S. startups such as Rivian Automotive Inc ( RIVN.O ) and Lucid will find it difficult to gain share in an industry competing for shrinking consumer wallets.

Lucid’s short interest as a percentage of total float is around 37% versus just 3.5% for Tesla. Still, in dollar terms, Lucid’s short interest totals $1.6 billion, compared to $15.01 billion for Musk’s automaker.

Short sellers took a $685 million market loss on Lucid stock on Friday, research firm S3 Partners added. However, losses only occur if short sellers close their positions.

“With Lucid short sellers’ mark-to-market losses rising, we should expect short-covering to begin in earnest after today’s short-side carnage,” said Ihor Dusaniwsky, CEO of S3, adding that it has become a popular trading position.

A long-short fund manager that had no previous exposure to Lucid said it decided to short it, as this person believes the peak was based solely on hearsay.

Reporting by Carolina Mandl, Chavi Mehta in Bengaluru and Hyun Joo Jin; Editing by Maju Samuel and Josie Kao

Our standards: Thomson Reuters Trust Principles.