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Wait For The Post-Merger Dip Before Investing in Lucid Motors

There is no stopping the Electric vehicle industry and there has been a lot of buzz surrounding it. The growing popularity of EVs and economies following strict climate change policies has led to a shift in user demand. Several companies are entering the EV market and there is space for all. Lucid Motors is a strong player in the industry and it has impressive plans for the future. Churchill Capital (NYSE:CCIV) is an SPAC behind Lucid Motors and CCIV stock has been in the limelight lately.

Exterior of Lucid Motors building
Source: gg5795 / Shutterstock.com


Lucid Motors is currently at the cusp of delivering a production version of the Air EV after years. CCIV stock had been trading in the range of $9 and $10 since September 2020 but it saw a spike in February 2021 where it hit an all-time high of $64. It has shown volatility since then and is trading around $23 today. 

Lucid Motors has the potential to topple off Tesla (NASDAQ:TSLA) in the luxury EV segment. Peter Rawlinson, CEO of Lucid was the chief vehicle engineer of Tesla Model S. He is the leading engineer behind Lucid Air. The company has a strong and experienced team that could turn the projections and goals into a reality but I would recommend investors to wait for the merger to complete before investing in CCIV stock.

More speculation, less action 

Lucid Motors will raise $4.6 billion in cash through a merger with Churchill Capital. This merger will increase the market cap of Lucid Motors to $40 billion from $6.9 billion. Yes, the company has the potential but it is yet to prove itself.

The company has not sold a single car and it believes that it can topple Tesla, which looks like speculation to me. Tesla has been in existence for many years and is one of the biggest names in the EV industry. It already holds a strong market share and presence in the sector.

Lucid Motors will be heavily dependent on the U.S. market to achieve annual sales but the U.S. market already has a lot of well-established players. EV companies are already expanding into the European markets. If Lucid Motors manages to grab a share in the market, it may take years to hit high sales and revenue numbers. What we are talking about now is only speculation.  

More to Come

The company is expected to start deliveries in the second half of this year and the cheapest version of The Air will come out sometime in 2023. There was already a delay in the delivery of The Air due to the pandemic. 

There will be four different Air versions and The Air Touring will be available this year. The company already has 9,000 reservations for the car which could lead to $800 million in sales.

It wants to produce at least 20,000 vehicles in 2022 and 250,000 vehicles in 2026. These numbers look too good to be true. For a company to prove its worth, there has to be tangible results and strong fundamentals but with Lucid Motors, it looks too far away.  

The Bottom Line on CCIV stock

CCIV stock has had a wild ride in the stock market and it enjoyed an excellent start to the year. This is certainly a golden age for EVs and it is a great time to enter the industry. The numbers look encouraging but there is no guarantee that the game plan will remain the same.

Although the company has received many pre-orders, the execution is yet to occur. Once the company begins deliveries, there will be a lot to look forward to. 

However, the projections and timeline can vary which will bring volatility to CCIV stock. Lucid Motors has great potential but wait for the merger to complete before you buy the stock.

Also, the merger could lead to a dip in the stock which will be an ideal opportunity to add it to your portfolio. 

On the date of publication, Vandita Jadeja 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.

Article printed from InvestorPlace Media, https://investorplace.com/2021/06/wait-for-the-post-merger-dip-before-investing-in-cciv-stock/.

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