GraniteShares' 2X Long LCID Daily ETF (LCDL) entered delisting procedures after its net asset value turned negative following Lucid Group's stock collapse. According to a GraniteShares announcement on the 17th (local time), the leveraged ETF tracking Lucid stocks at 2x exposure saw its NAV drop below zero, triggering immediate delisting. The collapse was triggered on the 14th when Lucid's stock plummeted over 50% intraday amid liquidity crisis and bankruptcy rumors, causing the swap counterparty to immediately liquidate derivative positions per contract terms. The leveraged ETF structure amplified losses, pushing the fund's per-share NAV to negative $0.016 (approximately negative 24 Korean won), leaving no residual assets for investors. Leveraged ETFs use derivatives to amplify returns of underlying assets but carry extreme downside risk during sharp market declines.
GraniteShares LCDL ETF Records Negative NAV After Lucid Stock Collapse
The triggering event occurred on the 14th when Lucid's stock price collapsed over 50% from the previous trading day's closing price as liquidity crisis and bankruptcy rumors emerged simultaneously. The swap contract counterparty immediately liquidated derivative positions according to contract provisions. As a product designed to track 2x the returns of the underlying asset, the ETF's asset value instantly crossed into negative territory when the daily decline exceeded half, and the exchange immediately halted trading.
GraniteShares explained that the ETF's per-share net asset value stood at negative $0.016 (approximately negative 24 Korean won) as of the liquidation point, meaning no residual assets exist to distribute to investors. Stock trading remains suspended until official delisting and liquidation procedures are completed.
The asset manager stated this situation was a pre-disclosed risk in the prospectus. The prospectus contained provisions that if the underlying stock drops more than 50% in one day, the leveraged product could incur losses exceeding principal, and swap counterparties hold the right to immediately terminate contracts.
Lucid Denies Bankruptcy Rumors Through CCO Nick Twork
Lucid Motors immediately issued a rebuttal. According to Forbes reporting, after an article emerged suggesting Lucid was considering filing for bankruptcy protection, the stock plummeted 55% in one day, and the company officially denied the report.
In the same report, Lucid Chief Communications Officer Nick Twork stated the rumor was groundless. He explained the company has sufficient liquidity secured to operate through next year, and no special board committee has been formed to review the reported scenarios.
Previously, electric vehicle specialist publication EV reported that Lucid commissioned a management advisory firm to prepare a report on future operational plans. The publication stated the report could potentially include options such as taking the company private or filing for bankruptcy protection.
Lucid Motors Background and Market Performance
Lucid Motors is an electric vehicle manufacturer founded by former Tesla engineers and entered the stock market through a SPAC (Special Purpose Acquisition Company) merger in 2021. Since going public, continued stock underperformance and large-scale operating losses have led to persistent management uncertainty.
FAQ
What happened to the GraniteShares 2X Long LCID Daily ETF on the 17th?
According to a GraniteShares announcement on the 17th (local time), the LCDL ETF entered delisting procedures after its net asset value turned negative $0.016 per share, leaving no residual assets for investors.
Why did Lucid stocks drop over 50% on the 14th?
Lucid's stock plummeted over 50% intraday on the 14th as liquidity crisis and bankruptcy rumors emerged simultaneously, though the company later denied these rumors through Chief Communications Officer Nick Twork.
What did Lucid's CCO Nick Twork say about the bankruptcy rumors?
Nick Twork stated the rumor was groundless, explaining the company has sufficient liquidity secured to operate through next year and no special board committee has been formed to review bankruptcy scenarios.
