Special purpose acquisition company (SPAC) plays like Churchill Capital Corp IV (NYSE:CCIV) play an odd role in today’s financial world. Plays like CCIV stock aren’t inhabiting the same reality as the rest of the economy.
The disparity between the market and the economy is stark right now. Unemployment numbers are still high. Hopefully, with vaccines rolling out worldwide, we will see the back of this crisis soon.
However, despite the novel coronavirus pandemic, the Dow Jones, Nasdaq, and S&P 500 are on fire at the moment because of SPAC mania.
You probably saw some news snippet in 2020 regarding this investment vehicle’s spectacular rise. According to Bloomberg data, more than 200 blank check companies raised $80 billion from investors last year, contributing almost half of the year’s volume of initial public offerings.
SPACs have brought everything to the market, from financial services firms to innovating tech startups. However, the electric vehicle (EV) industry has emerged as a favorite for novel investment vehicles. Theoretically, it makes sense.
EV startups want to list but don’t want to go through a traditional IPO’s cumbersome paperwork. Meanwhile, SPACs are on the clock and need to identify a viable company for investment purposes quickly.
Now, against this backdrop, you will understand why CCIV stock is doing so well. It’s reportedly merging with EV maker Lucid Motors that targets the luxury end of the auto market. The “blank check” shell corporation is the fourth brainchild of Michael Klein, a SPAC space specialist. Klein also has versions six and seven underway as well.
Regardless of what you think regarding its prospects, it’s a good time to initiate a small position considering the short-term catalysts that are in place for the stock to do well.
CCIV Stock: Tesla Competitor Emerges
Among a sea of SPACs, CCIV stock has gathered a lot of attention. However, it is the Churchill SPAC that has gotten the most attention. It has raised $1.8 billion at this point.
The reason for all this excitement is because of Klein, and the euphoria surrounding the larger EV space. Bloomberg first reported that EV maker Lucid Motors is in talks to go public through a merger with CCIV.
According to the article, the talks are ongoing and could fall apart. However, the risk is worth taking. Lucid Motors was founded in 2007 and is based in Newark, California. The company is one of several interesting EV startups out there. Its all-electric offering, Lucid Air, was unveiled last year.
Pricing is pretty reasonable at $77,400 before available tax credits of $7,500. If you consider those, you have a base price of $69,900, a pretty good number when you think that the company wants to take on the Tesla Model S in the luxury sedan market.
We have all heard how investors are clamoring to find the next Tesla (NASDAQ:TSLA). Well, Lucid may be the answer to that dream. It looks like we finally may have a car that can compete in range, price, performance and design.
Near-Term Catalysts to Exploit
The race to find the next Tesla is leading to some mind-numbing valuations. CCIV stock is trading up at approximately $56. That is the result of pure speculation because we just had a new report that the two parties are nearing a deal.
CCIV stock is up more than 400% over the past three months, handily outpacing the S&P 500 and Dow Jones Industrial Average.
At this point, there is more in favor of the deal happening than not. Sources close to the matter say CCIV is looking to attract over $1 billion by selling shares in private investment in public equity (PIPE) transaction for the Lucid deal. If it goes according to plan, Lucid Motors will get a $12 billion valuation.
If you initiate a small position right now, you stand to make a lot of money from your investment. When the merger becomes official, expect the stock to go hyperbolic. Then there will be a string of approvals, and then the stock will start trading under a ticker symbol.
Each of these will be accompanied by a nice bump. If you just in it for trading, then there are several short-term catalysts to book your profits.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
