At their current price, shares of Churchill Capital IV (NYSE:CCIV) stock are down almost 70% from 52-week highs. Today, that decline is continuing ahead of the Lucid Motors SPAC merger, and some investors may be wondering why. They also may be wondering if CCIV stock could benefit from a future short-squeeze rally.
So what should you know now?
To start, CCIV stock has been struggling since Churchill Capital IV and Lucid Motors finally confirmed their intent to merge. The hype following a Bloomberg article speculating on such a merger took shares to astronomical highs and drove a powerful retail investor following. Then, concerns over the SPAC valuation and specifically the PIPE investment hit CCIV.
Although a number of catalysts have helped lift shares since the merger announcement, Churchill Capital remains far off its highs. That decline is continuing today, with CCIV down about 6% in trading. It seems that a lack of clarity on the American Jobs Plan is hurting EV stocks as a whole, as investors are waiting for details about the long-term EV benefits. Also hurting matters is a new short report on QuantumScape (NYSE:QS). The report from Scorpion Capital says that QS is a pump-and-dump scheme, and even says it is worse than the infamous Theranos.
Those strong words appear to be shaking confidence in all EV stocks today, and CCIV is no different.
However, with CCIV down, investors on social media are turning to another story: short interest. Churchill Capital IV has some speculating that it could benefit from a short squeeze rally, like GameStop (NYSE:GME) or Discovery (NASDAQ:DISCB). So what do you need to know about this story?
CCIV Stock and the Short Squeeze Story
To start, where does the CCIV stock short-squeeze speculation come from?
Well, according to data from Yahoo Finance, more than 20% of the float is being sold short. Other sources estimate the short ratio is as high as 25%. More importantly, investors have caught onto the fact that Churchill Capital is one of the blank-check companies with the highest short ratio. This means it is very appealing to some investors searching for short-squeeze candidates.
Additionally, as InvestorPlace contributor William White highlighted yesterday, short squeezes have become very interesting to Wall Street. Since the GameStop squeeze, investors have been searching for more opportunities. We have seen speculation around ChargePoint (NYSE:CHPT), and an impressive rally in DISCB shares. Broadly, short interest on SPACs is also climbing, supporting the case for a CCIV stock short squeeze.
So will a CCIV stock short squeeze manifest? One Redditor thinks so, outlining the case for a powerful blow to short-sellers.
No matter what, be sure to keep this story on your radar right now.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.