Shareholders approved Friday EV startup Lucid Motors’ merger with special intent acquisition busines Churchill Capital IV, after the companies diversified the deadline by one day because not enough retail investors pictured up to cast their vote.
The issue is unusual but could become more common as more firms eschew the traditional IPO path to public business and instead merge with SPACs.
The hiccup occurred on Thursday, when shareholders voted to approve all but one of project proposals as part of the merger — overture two, which would revise the company’s charter so that Lucid could receive key financing. That proposition requires a higher number of elects than the others — and it must be approved for the combination to come about — so a lack of elects intention up halting the entire process.
The lack of stockholders was condemned on retail investors’ unfamiliarity with the SPAC process and, unbelievably, spam filters departed awry.
Churchill chairman Michael Klein raised the possibility that some of the emails sent to shareholders were accidentally sent to voters’ spam folders. While it may seem incredible that something as low-tech as a Gmail spam filter might end a multibillion dollar business merger, it seems that may have occurred in this case.
“We simply need more votes, ” Klein said on an investor call Thursday. Lucid Motor CEO Peter Rawlinson was also direct: “I need you to vote for suggestion two.”
“We recognize that for many of you, this voting process may be brand-new or not standard, ” Klein continued. He later thanked the many individual stockholders but advised those “participating from the new programmes, the brand-new apps, ” to vote. “They may not inevitably be steering you clearly to the voting service.”
The number of amateur or so-called “retail traders” has exploded for since the beginning of the pandemic, mainly thanks to apps like Robinhood, which leveragings gamification strategies to encourage consumers to buy and sell assets from anywhere. The spire of this phenomenon will likely be remembered by autobiography in the explosive rise in prices of stocks for flunking companies like GameStop and AMC entertainment, engineered by an horde of retail traders on the subreddit r/ wallstreetbets. Retail investors account for around 10% of the U.S. equity trading work, according to a report from Morgan Stanley, down from a high of 15% last September.
But if the rise in the price of meme furnishes shows us anything, it’s that retail traders are a powerful power. The Morgan Stanley report notes that “retail investors tend to prefer companies in sectors they are likely to be familiar with as consumers, such as Consumer Discretionary, Communication Service, and Technology.” This could be why the Churchill SPAC was high on countless retail investors’ radars.
In a highly apportioned pole on the subreddit r/ SPACs, a Reddit user implores new retail shareholders to participate in voting: “This is not regular. SPACs have never had to beg shareholders to act in their own best interest before.
You MUST vote. A non-vote does NOT count as a YES. A non-vote is just a non-vote.”
While Lucid’s merger hold-up is a very different scenario than that of meme inventory trading, it’s yet another reminder that retail investors are continuing to shape markets.
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