Shares of Lucid Group (NASDAQ: LCID) have spent much of the week sliding deeper into the red after the company announced an investigation by the U.S. Securities Exchange Commission (SEC).
Lucid announced on Monday that it had been subpoenaed by the SEC. According to the company's filings, the regulator is probing it for documents related to the special purpose acquisition company (SPAC) that took it public. Lucid is also under investigation for specific claims the company has made.
The company was taken public in February by Churchill Capital IV Corp. While Lucid's filings don't make mention of potential concerns with its SPAC merger, the talk of "certain projections and statements" may refer to the company's statements of its paid reservations.
Previously, Lucid has claimed it has 11,000 paid reservations and that its factory is "on track" to deliver them. Given an ongoing independent investigation by law firm Hagens Berman into these claims, there seems to be growing suspicion that Lucid may have misled investors.
The news surrounding Lucid is eerily reminiscent of the scandal that faced Nikola (NASDAQ: NKLA) earlier this year. Nikola founder and former CEO Trevor Milton was indicted on counts of fraud and misrepresenting "nearly all aspects of the business." Milton had deliberately misled investors on the company's potential to boost Nikola's stock price.
Unlike Nikola, however, Lucid has at least developed and produced a purchasable product. The Lucid Air Dream even secured the bragging rights of the longest EPA-rated range EV on the market. Given that Lucid has demonstrated its technology publicly and secured an EPA rating, it may be that investors and regulators find the company's manufacturing capacity suspect.
Lucid took an off-market beating over the weekend, with shares starting Monday 15% down. The company recovered 12% by market close. Shares took a deeper downward turn over the next few days, losing 18.6% by market close on Thursday.