- CCIV is stabilizing around the $30 per share level.
- Lucid Motors and Churchill merger the hot topic of SPAC's for 2021.
- PIPE transaction likely caused the sell-off.
Update Wednesday, March 3: Shares in Churchill Capital Corp (NYSE: CCIV) lost 9% of their value on Tuesday despite staging an impressive bounce from four-week troughs of $26.56. In the post-market trading, the stocks of the blank check company reversed the slump and rebounded 1.19% to recapture the $28 mark. The ‘sell the fact’ trading on the Lucid Motors merger confirmation continues, with the Volvo announcement that it plans to go fully electric globally by 2030 exacerbating the pain in the CCIV shares.
The late recovery in the shares could be attributed to the risk rebound on the global markets, as the continued retreat in the US Treasury yields eased concerns over overheating.
CCIV Stock Price
Monday has seen the retail bulls once again take control sending shares in CCIV soaring 10% in pre-market trading. Currently, CCIV shares are trading at $58.45. Friday saw a strong performance for Churchill shares until a large closing order hit the stock.
CCIV Stock News
The deal has been one of the hottest topics among the new army of retail traders on Reddit and Twitter. The deal seemed to have many favourable conditions to help get it across the line.
Michael Klein who established CCIV has numerous connections with Lucid Motors. Klein has worked closely with and advised Lucid Motors' main stakeholder, the Saudi Public Investment Fund (PIF). Klein is also close to Lucid Motors CEO Peter Rawlinson, having worked with him on the Dow Chemical DuPont merger.
Churchill Capital went public at $10 and has steadily climbed as speculation over a deal with Lucid has mounted. The shares have broken above $60 on Friday as retail traders grow increasingly optimistic over the merger being announced.
CCIV Stock Forecast
What happens once the deal is confirmed? It has been reported that Churchill will raise up to $1.5 billion in additional funding to complete the deal. This will be done via a Private Investment in Public Equity (PIPE) transaction. This is not good news for existing shareholders in CCIV as a PIPE transaction is dilutive.
For CCIV, there are 200 million shares in issuance, which will grow to 300-400 million shares depending on the exact amount raise. That is highly dilutive to existing shareholders. This is assuming the fundraising is done via a traditional PIPE transaction. Existing shareholders including retail may or may not be given the opportunity to subscribe and keep their holding intact, this will not be clarified until and if details of the merger deal are released.
In any case, the PIPE shares will be heavily oversubscribed.
Therefore, holders will convert into shares of Lucid Motors and, from there, shares will be in direct competition and comparison with Tesla, if predictions are to be believed. Electric Vehicles are on trend right now and being a Tesla competitor is no bad thing given the meteoric rise of Tesla's share price over the last number of years. Competition in the EV sector is increasing from China and existing auto manufacturers. This may mean Lucid Motor's share performance will not match that of Tesla. But even a performance matching half of Tesla's gain would be enough to see Lucid shareholders comfortably rewarded.
Lucid Motors Forecast
Lucid Motors is to launch its first model imminently in the US with follow-up launches planned for Europe in summer 2021. The initial model will be priced at $169,000, so a much higher price point than Tesla's entry model. More affordable models will also be launched in due course to compete directly with Tesla. In multiple tests, Lucid outperformed Tesla in terms of range, top speed and other features, while there is no doubt Lucid EV's are highly attractive looking. With a former Telsa Chief engineer as CEO, technical knowledge and performance should be a given. Initial launches and sales numbers, predictions will give a steady newsflow over the course of 2021 and should provide catalysts if they can match or beat expectations.
Update Tuesday, March 2: Shares in CCIV continue to trade around the $30 level having fallen sharply once details of the Lucid Motors merger became clear. The PIPE transaction likely being the main factor weighing on CCIV shares. The Electric Vehicle sector is to become more competitive with mainstream auto manufactures entering the industry. Ford announced last month it is to be fully electric in Europe by 2030 and Volvo announced on Tuesday it is to be fully electric globally by 2030.
Lucid Motors is on the verge of going public via Michael Klein's Churchill Capital SPAC. Reports in Bloomberg and other sources over the weekend appear to confirm the deal is nearly done. Churchill Capital and Lucid have been rumoured to merge for most of 2021 and the deal could be announced as early as Tuesday according to Bloomberg. CCIV and Lucid Motors merger was also reported on by arabianbusiness.com
Update February 25: Churchill Capital Corp IV (NYSE: CCIV) has been extending its slide after the black check firm confirmed its SPAC merger with Lucid Motors. The highly-anticipated merger had pushed shares higher, but the integration of the luxury electric vehicle maker has been causing a sell-off in a "buy the rumor, sell the fact response. CCIV crashed by 18.49% to $28.70 on Wednesday and is set to extend its slide and drop below $28 according to Thursday's premarket trading. Will bargain-seekers jump in? Automotive experts have praised Lucid Air, and that may inject fresh fuel into the firm.
Update Wednesday, February 24: Shares in CCIV continue to suffer from post-merger fatigue as the "buy the rumour, sell the fact" trade continues to reassert itself! The PIPE transaction being done at $15 is likely weighing on the shares as investors digest the details of the CCIV Lucid merger. At the time of writing CCIV share price is $30.93, a loss of 12% on Wednesday.
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