Tomorrow the deed is expected to be done. That is, Churchill Capital Corp IV (NYSE:CCIV) is anticipated to complete its merger with Lucid Motors. When that happens, Joanna Makris writes that CCIV stock, which will then trade under the ticker LCID on the New York Stock Exchange, may have a market capitalization as high as $42 billion.
As a fan of professional sports, I am reminded by the last year’s SPAC frenzy of the NFL Draft. In both areas, months and months of analysis culminate in a single pick.
Now many retail investors will get to see if their first-round draft pick, in this case CCIV stock, will deliver the gains that they had anticipated.
Is Lucid a Blue Chip or a Bust?
Of course, the problem with the NFL draft is that some “can’t miss” picks perform very badly. And, like NFL draft picks, Lucid Motors has plenty of potential. Here are bullet points, paraphrased from Makris’ column, that summarize the bullish sentiment around Lucid Motors:
- A$5 trillion global automotive market leaves plenty of room for disruptive companies.
- Lucid is claiming to have superior battery technology compared to Tesla. Lucid says that its batteries have longer ranges and charge more quickly.
- By targeting the “luxury” EV space, Lucid will likely have less competition than some of its peers.
But keep in mind that, for now, it’s all just guesswork. And for Lucid Motors, the next car that it delivers will be its first.
The Best Ability is Availability
There’s a saying in sports that there are times when the best ability is availability. This is said in reference to highly talented players who, for whatever reason, can’t seem to avoid injuries. At a certain point, a team will move on from that player and instead utilize someone who is healthy.
I’m not suggesting that Lucid Motors won’t deliver the goods on time. With the dizzying amount of EV companies to choose from, however, at this point your guess is as good as mine.
What Did You Expect Him to Say?
At Lucid’s Investor Day presentation, Lucid Motors CEO Peter Rawlinson remarked that his company deserved its premium valuation because its technology is superior. In this case, he didn’t specifically call out Tesla (NASDAQ:TSLA), but he didn’t need to. The message was clear.
It seems like investors love that kind of talk. I’m not as impressed. Continuing the draft analogy, every team says it had picked the guy that it wanted. Comments like that fall under the, “what did you expect” category? Many times, when it comes to presentations like Rawlinson’s, it’s what the CEO doesn’t say that’s more significant.
In this case, as Makris noted, Rawlinson didn’t confirm when the company would start producing its EVs. Lucid may nonetheless start manufacturing its cars on schedule this year. However, in a market in which availability will be critical, I think that Rawlinson should have lead with that information.
It’s Time to Turn in the Card on CCIV Stock
When a player is drafted, the phrase, “the card is in” is employed. That’s akin to the moment that the owners of CCIV stock face now that the merger is nearly complete.
In relation to draft picks, the phrase, “only time will tell” comes to mind. For many players, it can take several years for their true potential to be revealed.
But time is something that isn’t a luxury for those currently holding the bag on CCIV stock. They are looking for the stock to pop once LCID stock begins trading publicly.
However, for those who want to buy CCIV stock and hold it for the long-term, the shares still seem overpriced at over $23.50 a share. That being said, investors, like general managers, need to have the courage of their convictions.
If you’ve turned in the card for Lucid Motors, I wish you well.
On the date of publication, Chris Markoch 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 Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.
