One of the biggest and most anticipated SPAC deals ever was finally announced during after hours on Monday, February 22nd, 2021. Lucid Motors would be completing a reverse merger with special purpose acquisition company, Churchill Capital ($CCIV). Information regarding the deal was leaked early via an unknown insider from within Lucid. This drew a large amount of speculation and interest from retail investors long before any significant information was released. 

Lucid Motors made headlines in December 2020 when CEO Peter Rawlinson announced that the Lucid Air will hit the road in the first half of 2021. The Air is expected to compete with Tesla’s Model S in all aspects. The Air will have a battery life of 517 miles per charge and an acceleration of just over 2 seconds from 0-60mph, beating Tesla’s Model S. Given that Peter Rawlinson used to be a part of the Model S engineering team, these claims will more than likely hold true. That being said, Tesla CEO Elon Musk claims Rawlinson was not a part of the battery, electronics, or software design. These claims added to the hype-driven merger that was announced on Monday, February 22nd, 2021. 

Following the announcement of the merger, the price per share fell 38% from Monday’s close of $57.40 to a close of $35.23 on Tuesday, February 23rd, 2021. This downfall was due to a restructured deal put forth by Lucid Motors to Churchill Capital. The original deal had Lucid valued at around 12 billion dollars, but once the retail hype began to flourish, Lucid saw the opportunity to cash in on more value. Lucid then sent $CCIV a new deal valuing their company at a little over 24 billion. Thus the stock price was not nearly as good of a deal as before. This news sent institutional investors running long before retail investors could react. 

Of course this news came with some controversy. Many of the retail investors involved with this security are trading on the very criticized platform, Robinhood. Robinhood has been in some murky waters as of 2021 with a few complications due to their phony business model, but now they’re in a whole new slew of sh*t. 

Their new conflict is in regards to their extended-hours trading cap. Robinhood users are allowed to trade between the hours of 9 am and 6 pm (EST), pre-market is from 9-9:30 am, market hours are from 9:30 am to 4 pm, and after-hours trading is from 4-6 pm. Therefore, Robinhood users are given 9 hours to trade per day. The actual pre-market hours begin at 4 am (EST) and end at 9:30 am, and the actual after-hours are from 4 pm to 8 pm (EST). Therefore institutional investors and retail investors using other platforms can trade for 16 hours per day. 

Since Robinhood has a cap on pre-market and after-hours trading, there is a disadvantage to any retail investor trading on their platform. This disadvantage was on full display on the evening of Monday, 2/23/2021. The institutional investors were able to react to the critical merger news a day before most retail investors could do anything about it. This caused the price to drop roughly 30% before Robinhood investors were even allowed to sell their shares. 

The Robinhood community is up in flames once again for this potential market manipulation stunt. Is it possible Robinhood cuts off their extended hours in order to allow for institutional investors to react to information first? Of course it is a possibility. Robinhood gets paid by large firms such as Melvin Capital and Citadel Investment Group. They work hand in hand with Robinhood to execute and back trades as well as analyze information regarding retail investor activity. They can use this information to predict and infer patterns within the market. Without them, Robinhood would not have a business plan or a source of income. 

If this allegation is true then Robinhood would have even more explaining to do. The controversial trading platform claims to be for the good of the retail investor but their ethics seem to say otherwise. Regarding Lucid Motors stock, their current value is still considered an excellent buy. Imagine buying Tesla when they were valued at roughly 24 billion. That being said the merger with Churchill still needs to follow through, and with their current volatility that can all change very quickly.