Lately, many traders have been waiting for the closing of the business combination between special purpose acquisition company (SPAC) Churchill Capital IV (NYSE:CCIV) and luxury electric vehicle maker Lucid Motors. The lengthy wait seems to have taken a toll on some CCIV stock holders.
In fact, it’s caused some folks to dump their shares. Was this a reasonable thing to do, or should they have held their shares and been more patient?
I would contend that one trader’s irrational, sentiment-driven decision is another trader’s green light to buy at a reduced price. Sure, the SPAC merger is taking a while, but there’s no bad news and Lucid Motors offers an outstanding product lineup.
So, if some folks are disappointed because the business combination isn’t moving along quickly enough, I don’t mind at all. I’ll just stay focused on Lucid Motors’ new-generation automotive technology and consider any price dip in CCIV stock a prime buying opportunity.
A Closer Look at CCIV Stock
Generally speaking, I don’t advise that investors buy a stock after the price has gone up a lot. The higher the run-up, the more cautious I tend to be.
CCIV stock provides a textbook example of this principle in action. At the beginning of 2021, the share price was barely above $10. That’s not unusual for a pre-deal-announcement SPAC stock.
Suddenly, the share price shot up like a rocket. On Feb. 18, the stock touched an astounding 52-week high of $64.86. We’re talking about a 5x profit on a $10 investment in a matter of weeks.
Evidently, the enthusiasm wore off as the trading community waited for the SPAC merger to finalize. Thus, as of March 12, CCIV stock was all the way down to $26.77.
If you still believe in Lucid Motors as an electric vehicle maker with outstanding value, then the share-price retracement shouldn’t be considered a long-term problem.
Just Be Patient
So, why are investors losing patience with Churchill Capital IV and Lucid Motors?
InvestorPlace contributor Chris MacDonald offered some insight into what may be the trading community’s mind-set.
Citing “a lack of visibility into what’s going on with the merger,” MacDonald proposed that “Investors seem to be dissuaded by a lack of visibility with respect to a timeline for a merger, as well as key production details from Lucid.”
If that’s the case, then I can only suggest that CCIV stock holders chill out and be patient. The SPAC merger announcement was just released on Feb. 22, for goodness’ sake.
I suspect that the fast action of other electric vehicle SPAC’s has collapsed amateur investors’ attention spans lately. The sensational stories of Robinhood- and Reddit-fueled short squeezes have seemingly distorted people’s expectations.
A Promising Automaker
To these amateur investors who are losing patience, my best advice would be to check out Lucid Motors’ automotive offerings. Focus more on the company and its products, and less on the merger’s timeline.
Take the time to browse through the Lucid Motors investor presentation. I promise that you won’t be disappointed.
Just a few stats should remind you of why the Churchill/Lucid deal was so exciting in the first place:
- 403 patents filed
- More than 20 million real-world vehicle miles driven
- 1,000+ horsepower
- Over 500 miles on a single charge
- Less than 2.5 seconds (projected) to run from zero to 60 miles per hour
- 9.9 seconds (projected) to run a quarter-mile
- Just 20 minutes to charge up to 300 miles “with 900V+ Architecture”
- More than 7,500 reservations received as of February 2021
- Over $650 million in potential sales, as represented by reservations
The Bottom Line
As you can see, there’s a lot to like about Lucid Motors. Disappointment just isn’t the appropriate sentiment here.
So, just relax, be patient and hold your CCIV stock shares if you have them. And if you don’t have them, then perhaps this is the perfect time to start a position.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.