Lucid (LCID) stock soared Friday by as much as 88%, with trading repeatedly halted for volatility, as speculation spread that Saudi Arabia’s Public Investment Fund (PIF) was considering buying out the remaining stake in the electric carmaker.

The spike was triggered by a potential deal alert at the website Betaville. Shares were up 43% at the close, marking the stock’s biggest one day rise on record.

Analysts speculated the stock’s parabolic move was likely exaggerated by traders covering short positions.

Garrett Nelson, VP and senior equity analyst at CFRA Research said, “The Lucid rumor really underscores the risk of being involved in EV equities at the moment. Short interest across the space has surged and is at dangerously high levels following a disastrous year of EV equity performance, making stocks such as LCID prone to short squeezes (LCID’s current short interest is over 25% of the float).”

Lucid, which produced 7,180 vehicles in 2022, is 65% owned by the Saudi PIF.

Nelson said, “If the Saudis buy the remainder of the company, we think they would likely invest more heavily in fixing the operational issues which have constrained its production growth and it likely provides a greater degree of viability for the company over the long-term.”

The analyst noted, the company’s production is still anemic compared to other companies, with LCID currently producing only about 38 units per day. By comparison, market leader Tesla (TSLA) produced 4,779 units per day in the fourth quarter.

Since the beginning of the year, Lucid is up 86%, countering the more than 80% loss it endured last year, amid the broader market’s underperformance.

Photo courtesy of Phillip Pesar.