With special purpose acquisition company Churchill Capital IV (NYSE: CCIV) stock down 55% from its 52-week high, now is the time to buy the dip and gain exposure to electric vehicle maker Lucid Motors.
CCIV stock experienced an incredible run-up of around 450% earlier this year on rumors that the special purpose acquisition company (SPAC) would merge with luxury electric car maker Lucid Motors.
Once the SPAC deal was formally announced, shares of Churchill Capital IV sold off. Many investors who bought the rumor decided to sell on the news. A pullback in the broader electric vehicle sector further accelerated the slide in Churchill Capital IV’s share price.
While the drop in CCIV stock has been steep and scary, astute investors should see the drop as a golden buying opportunity to grab shares of an electric vehicle company that many analysts feel could compete toe-to-toe with market leader Tesla (NASDAQ:TSLA).
CCIV Stock: High-End Vehicles
Founded in 2007 and based in Newark, California, Lucid Motors is one of the most advanced electric vehicle companies set to come to market. Unlike many electric vehicle manufacturers that are still in the early planning stages, Lucid Motors is at the production phase at its factory based in Casa Grande, Arizona. The company was founded and is run by Peter Rawlinson, the former vice-president of Engineering at Tesla.
Lucid Motor’s first luxury electric sedan, called the “Lucid Air,” is currently in production, and deliveries are slated to start this June. A second vehicle, an electric sport utility vehicle (SUV) called the “Gravity,” is expected to enter production later this year. And, like Tesla, Lucid Motors is aiming for a high-end clientele. Pricing for the “Air” sedan ranges from $69,900 for the base model to $161,500 for the top end model.
With its a luxury pedigree and 500-mile driving range on a single battery charge, many analysts see Lucid Motors as a viable threat to Tesla. Lucid Motors plans to quickly increase production to 400,000 vehicles a year, and has announced plans to begin selling its Air sedan in Europe in 2022.
The company has also said that its annual revenues will grow 198% to $22.8 billion by 2026. That potentially explosive growth has many investors and analysts excited for CCIV stock to begin trading as Lucid Motors. The merger is expected to close in the second quarter of this year.
Experienced Deal Makers
While many people on Wall Street are warning that SPAC deals have run too far and are now in bubble territory, the Churchill Capital IV/Lucid Motors deal is different, in that it involves a mature company that is producing a real, tangible product. Churchill Capital IV is also different than many other SPACs because of the experience of the people managing the deal.
Churchill Capital IV is run by ex-Citigroup banker Michael Klein, a well-respected Wall Street deal maker who famously led Dow Chemical’s $130 billion merger with DuPont (NYSE:DD). In addition to Mr. Klein, Churchill Capital IV also has former Apple (NASDAQ:AAPL) design head Jony Ive and former Ford Motor Co. (NYSE:F) Chief Executive Officer Alan Mulally on its board of directors.
With this level of experience, Churchill Capital IV can be expected to manage the Lucid Motors merger expertly. The deal should go off without a hitch. It’s worth noting that early investors in Lucid Motors have included Saudi Arabia’s sovereign wealth fund, BlackRock (NYSE:BLK) and Fidelity Management.
Grab CCIV Stock
Despite the drop in price, there’s still plenty of reasons to be excited about the market debut of Lucid Motors. If anything, CCIV stock’s current price of around $29 a share represents better value for investors. And given the experience of the people behind Churchill Capital IV and Lucid Motors stage of development, there’s every reason to believe that this SPAC deal will be a home run.
The electric vehicle market is still emerging and maturing, and Tesla will not remain king of the hill forever. Lucid Motors is as well-positioned as any electric vehicle maker to knock Tesla off its perch and compete for customers on a global scale. While there are many questionable SPAC deals around at the moment, the deal to bring Lucid Motors public is not one of them. CCIV stock is a buy.
On the date of publication, Joel Baglole held a long position in AAPL.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.