The Curious Case of Lucid Group: A Reverse Split, A Rise, and A Risk Worth Taking?

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Lucid Group, the electric vehicle maker with aspirations grander than a dragon’s appetite for gold, has not had the easiest of years in 2025. In fact, it’s been a bit of a struggle, like trying to navigate a maze with a map that’s only half there. The company’s stock has slumped about 31% so far, with the most dramatic plummet taking place after they decided to pull the trigger on a 1-for-10 reverse stock split back in mid-July.

But then something truly peculiar happened. Around September 2nd, the stock did something that even seasoned financial wizards didn’t expect: it bucked the trend. Shares jumped about 17% (and a whopping 28% from the lowest point on September 3rd). Now, in the world of reverse stock splits, this is like a unicorn suddenly deciding to take up knitting. The question that inevitably arises: can Lucid keep the momentum going, or is this merely a fleeting moment of whimsy?

The Fabled “Normal” Trajectory

As history would have it, a reverse split usually involves a particular narrative, one as predictable as the sun setting over the horizon. The story unfolds like this: there’s a panic-induced sell-off once the reverse split is announced. Investors clutch their wallets like a squirrel with an acorn, and the stock price plunges. The day of the split, or the first day thereafter, sees the stock hit rock bottom, followed by a languid decline that can last for months, much like a slow parade of forgotten dreams.

Lucid’s reverse split played out exactly as the soothsayers of finance predicted. From the day they filed with the SEC on July 17th to the eve of the reverse split, shares tumbled by 36.5%. But here’s the thing-the real drama began on September 2nd. When the split took effect, the price took a sudden nosedive of 10.8%. The usual post-split malaise was setting in, except, this is where Lucid did something downright unorthodox.

The Peculiar Case of Rising After Falling

By September 3rd, if you’d asked most financial sages, they’d have told you that Lucid’s stock had reached its nadir, where it would stay, stagnating like an old pond. But no-Lucid had other plans. As the stock touched a stunning low of $16.16, trading volumes were actually climbing, and short interest was ramping up, like a group of overeager students heading to their first day at the Unseen University of Shorts. Normally, this kind of thing pushes the stock down further, like a balloon weighed down by a thousand angry bees.

But here’s where it gets fascinating-Lucid’s share price surged instead. Over the following days, the short interest climbed to nearly 80% of outstanding shares, but rather than sinking into oblivion, the stock began to rise. It was almost like a stock market version of a wizard’s duel, with the shorts casting spells of doom and the longs casting spells of optimism. On September 10th, after an impressive 20% rebound, the shorts finally waved their white flags and scurried away. Short interest plummeted to 12.8%, and the stock settled into a more stable range between $19 and $20 per share, like a dragon comfortably nestled in its cave.

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A Momentary Spark, or the Start of Something New?

The question now: Is Lucid’s stock rise post-split a genuine sign of something exciting on the horizon, or was it merely a market anomaly as rare as a polite ogre? The company’s 28% surge in price wasn’t the result of any earth-shattering new revelations. Sure, Lucid did announce a $300 million investment from Uber Technologies and a rather ambitious marketing campaign featuring Academy Award-nominated actor Timothée Chalamet, but both had been revealed in July. There was nothing truly new here-just a bit of a financial sideshow.

It’s possible that what we witnessed was a classic “short squeeze,” a phenomenon as old as time itself. Essentially, short sellers were caught in a bind when their bets against the stock started to unravel. As they were forced to cover their positions, the stock price shot up like a rocket aimed at the moon. Once the shorts were out of the way, the price leveled off. However, without substantial signs of growth from the business itself, Lucid’s stock is likely to return to the slow, predictable decline we’ve come to expect from reverse splits.

Lucid’s $300 million windfall from Uber might be nice, but it isn’t going to solve the deeper issue: the company’s ongoing financial woes. Lucid posted a loss of more than $1 billion in free cash flow last quarter, and no amount of Hollywood star power is going to change that.

So, if you’re pondering whether to jump into Lucid now, you might want to think twice. The recent uptick feels more like a blip on the radar, a fleeting moment of good fortune. In the world of growth investing, chasing after something that has only temporary momentum is as wise as buying a magic bean from a traveling salesman.

In conclusion, despite the recent surge, Lucid remains a stock best left alone, at least until they prove they can turn a profit or show signs of true innovation. In the meantime, I’d suggest leaving this one to the brave, the curious, and the slightly unhinged. 🧐

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2025-09-17 21:58