Lucid Group Inc. (LCID) had a rough Monday, dropping 6.71% to $12.71 as the electric vehicle maker got swept up in a broader market selloff. With no fresh company news to blame, Lucid simply fell victim to the downdraft pulling major indices lower—the SPY shed 0.44% while the tech-heavy QQQ dropped 0.59% during morning trading.

A Perfect Storm of Bad Vibes

The Monday weakness follows an already volatile stretch for Lucid. Investor sentiment has been fragile since a disappointing third-quarter earnings report where the company posted an adjusted loss of $2.65 per share, significantly wider than the $2.27 consensus estimate, while also missing revenue forecasts.

Adding to investor concerns was the recent departure of Senior VP of Product Eric Bach, along with fears about potential equity dilution stemming from the company's recently announced $875 million convertible senior note offering due in 2031. When your stock is already under pressure, losing senior executives and raising money through convertible notes isn't exactly the confidence boost investors are looking for.

Short Sellers Pile On

Here's where things get interesting: Recent data identifies Lucid as the third most-shorted stock on the market, with a staggering 48.99% short interest. That's an enormous bearish bet against the company.

Heavy short positioning is a double-edged sword. On one hand, it can trigger explosive volatility and short squeezes when positive news emerges—which explains the brief rebound last week driven by hopes for Federal Reserve rate cuts. On the other hand, it acts as a heavy anchor during risk-off sessions like Monday, amplifying downward pressure when the broader market weakens.

Without fresh positive catalysts to change the narrative, Lucid shares are retracing toward recent lows amid the general market pullback. Technical indicators aren't helping either—the stock earned a Momentum score of just 7.42, with negative price trends across short, medium, and long-term time horizons.

For now, Lucid remains caught between bearish conviction from short sellers and broader market weakness, making any recovery dependent on either a significant positive catalyst or a dramatic shift in market sentiment.