Churchill Capital Corp. (NYSE:CCIV). It’s gone from an electrifying SPAC to a wrecked vehicle with ambulance chasers in tow this year. But is now a smart time to park some risk capital in CCIV stock? Let’s take a closer look at what’s happening off and on the price chart of Churchill, then offer a risk-adjusted determination aligned with those findings.
What goes up, must come down. It’s a popular expression. But while far from accurate when it comes to the stock market, CCIV has largely made good on that promise in 2021.
More importantly and today, Churchill investors should be wary of buying too strongly into the idea, “if you liked it there, you have to love it down here.”
A Look at CCIV Stock
In a highly-volatile and toxic nutshell, in early January special purpose acquisition company Churchill Capital became an overnight sensation.
Not that CCIV stock was alone. There was an epic short-squeeze trade led by GameStop (NYSE:GME) occurring at the same time. As well, a reinvigorated wave of cryptocurrency mania which introduced Dogecoin (CCC:DOGE-USD) into investor consciousness was just getting started.
Nevertheless and in its own right, CCIV’s 550% gain in just over a handful of weeks was spectacular. And in a SPAC field filled with riskier ventures, CCIV’s January news it was taking EV upstart Lucid Motors public stood out as the real deal in more than one way.
One very real differentiator is Peter Rawlinson. Lucid’s CEO was the chief engineer on Tesla’s (NASDAQ:TSLA) Model S. Proven pedigree, right? Moreover, that expertise helped set up the company’s luxury sedan Dream Edition Air for a late spring debut well in front of competition from fellow SPAC Fisker (NYSE:FSR) and an Ocean EV expected to debut in late 2022.
Today, Lucid still looks well-positioned. But buying Churchill Capital right now has grown more complicated as well.
As an investment and despite shares shedding more than 70%, in some respects buying CCIV stock today is riskier than when shares approached $65. Maybe not in absolute dollar terms, but the dangers in other ways have increased.
For one, Churchill’s inflated $24 billion price tag for bringing Lucid public and revealed in late February as investors were becoming less-tolerant of higher-multiple stocks was a certain first shot over the bow to CCIV stock bulls. Clarity on that front had a price. And Wall Street didn’t like what it saw.
Another challenge which has hung over CCIV is the delayed launch of the Dream Edition Air into 2021’s second half. The tires have yet to meet the road. And with chip shortages already impacting some players in the auto industry, could further short-term disappointment be in the cards?
More recently, the threat of 1-800-LAWYERS style class action suits bemoaning production schedule backtracking by Lucid haven’t helped matters for CCIV shareholders. And behind the ambulance chasers, with U.S. regulators calling for greater SPAC transparency, what once may have been a back-up-the-truck buying situation is less certain on more than a few fronts. These include today’s CCIV stock rice chart.
CCIV Stock Weekly Price Chart
Source: Charts by TradingView
If you’re an active investor, trying to locate the “next” of anything is a largely elusive goal. Alphabet (NASDAQ:GOOGL). Microsoft (NASDAQ:MSFT). Apple (NASDAQ:AAPL). Those generational investments have no heir apparent. Tesla? Maybe less so given the nature of the auto industry. And with CCIV reversing the lion’s share of its Lucid hype; it might seem reasonable to see value in buying shares today. But I’d warn otherwise.
The concern on the price chart is that conditions responsible for helping drag Churchill shares lower don’t appear ready to release their hold. Technically, a second failure of triangle pattern this month below 76% Fibonacci support leaves CCIV stock in a downtrend. Further, a bearishly aligned stochastics indicates shares could continue to weaken and Lucid’s PIPE $15 pricing the next logical price target.
For investors more appreciative of the Lucid story – and a nearby happy ending – I’d suggest waiting for a confirmed weekly bottoming pattern alongside a bullish crossover from the stochastics indicator.
Should those conditions be met, a test spin in CCIV using an intermediate-dated, 5 point to 7 point wide bullish vertical structured 10% to 15% above the pattern signal price is thought to be a good compromise of risk and reward, both off and on the price chart.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.