Can Churchill Capital Corp. IV Stock Get Back Into Gear?

Churchill Capital Corp. IV (NYSE:CCIV), a SPAC (special-purpose acquisition company), is poised to merge with EV maker Lucid Motors, which is taking on Tesla (NASDAQ:TSLA).

The Lucid Motors (CCIV) logo is displayed in front of an ad for the Air sedan.

Source: T. Schneider / Shutterstock.com

Lucid’s plan is to trade on the NYSE under the ticker, “LCID,” but  it is not clear when the merger between Churchill and Lucid will be completed. Yet one thing is clear: CCIV stock is volatile!

Since the merger, the shares have soared to a high of $58. But unfortunately, the shares closed yesterday at just $20.12. Its  market capitalization is $5.2 billion.

Lucid’s Background

Lucid started in 2007 as a developer of EV battery systems. But the company  eventually transformed into a car manufacturer.

The company was smart to hire Peter Rawlinson, the former Vice President of Vehicle Engineering and Chief Engineer of Tesla, as its CEO. While at the latter company, he helped to create the Model S., so Rawlinson has a great background.

As for Lucid, it has been focused on pushing the limits of innovation. At the heart of its efforts is the Lucid Air. The EV has a range that is more than 100 miles higher than that of the Model 7, and it has horse power of 1,080. The basic model of the EV costs roughly $70,000.

Unlike various other EV startups like Fisker (NYSE:FSR), Lucid Air has its own production facility, which is located in Case Grande, Arizona. And the plant is certainly state-of-the-art. Recently Lucid released a 2.5 minute video of it, which shows the assembly line and its quality control process.

The Lucid Air is expected to hit the market in the second half of this year. But it will not  start producing a high number of EVs until 2022, when it expects to deliver about 20,000 vehicles.

The company believes that it could deliver over 500,000 EVs per year by 2030.

The Bottom Line on CCIV Stock

Following its merger with Churchill Capital, Lucid will have a strong financial base, as it is expected to obtain about $4.4 billion of cash from the transaction. Of this, $2.1 billion will be from the Churchill SPAC and the remaining funds will come from large investors, such as the Saudi Arabian sovereign wealth fund, Fidelity and BlackRock (NYSE:BLK).

It’s also important to note that the CEO of Churchill Capital is Michael Klein, who is one of the top operators of SPACs. Two of the other companies he brought to the markets through SPACs are Clarivate (NYSE:CLVT) and MultiPlan (NYSE:MPLN).

Moreover, there does appear to be considerable interest in Lucid’s vehicles. Lucid has received over 8,000 reservations for its EVs, representing more than $700 million of potential revenue.

But despite this, it may be worthwhile to be cautious when it comes to  CCIV stock, at least in the near-term. Even though the equities markets have recovered, Wall Street is still skeptical of SPACs now. A large number of them have hit the markets, and it can be tough to predict the growth of EV makers like Lucid because they often experience delays and complications.

By being patient, investors may ultimately be able to buy CCIV stock at a better price.

On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling.  He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.


Article printed from InvestorPlace Media, https://investorplace.com/2021/04/can-churchill-capital-corp-iv-stock-get-back-into-gear/.

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