Churchill Capital corp (CCIV) Stock Price and News: What is the latest news on the Lucid merger

Shares in CCIV continued to charge higher on Friday, reaching a high of $41.37 before closing at $39.98. The shares had been bid on rumours, again being circulated on social media, that the merger with Lucid Motors is imminent. CCIV shares gained over 15% on the week. See CCIV a deep dive.

CCIV Stock Latest news

So what happened on Friday? Well, basically the frenzy over the merger intensified. Traders began circulating screenshots of a Bloomberg Terminal showing the status of the deal changing and also that Venrock had put Lucid up for sale. This understandably generated much excitement.

But caution is needed. Yes the deal may happen and common factors and participants between CCIV and Lucid make it easier to get a deal done but Bloomberg is not in the business of releasing insider information. For starters, the authenticity of the Bloomberg screenshot cannot be confirmed (or denied!). Secondly, all the Bloomberg screenshot purported to show was that the parties may or may not merge. This is already common knowledge. It should also be noted the screenshot was dated January 11. This is the same date Bloomberg first reported that the two parties were in talks. 

Secondly, rumours swirled that Sculptor Capital had bought 6 million shares. The latest information available is from an SEC filing effective Q3 to the end of September 2020. SEC filings are required to be made quarterly. Sculptor's average price is just under $10. 

Source: Fintel.io

In fact, the most recent SEC data to end December 2020 shows institutional holders on average reducing positions. However, it should be noted a number of hedge funds have taken new positions as of the latest SEC filings so this is not a negative. There is always "churn" in an institutional list. Stocks will be part of various funds that institutional investors have to track and if the stock is removed from a fund or index then institutional tracking funds will sell the underlying stock irrespective of whether they think the price will go up or down. Hedge funds on the other hand are more profit-orientated.

Will CCIV and Lucid Motors merge?

No one except insiders has that information. Both Bloomberg and the Wall Street Journal have reported the two companies are in talks. CCIV and Lucid Motors' key executives are well known to each other. Michael Klein is incredibly well connected and has previously worked with Lucid CEO Peter Rawlinson and Lucid's main backer the Saudi investment fund. But no one knows the detail apart from those people involved directly and that is obviously insider information. All traders can do is try to calculate the probability of a merger and trade accordingly. Information is not always necessary for profitable trading, some chart traders will not even look at underlying fundamental news/data. Ride the trend and protect your downside risk.

Should I buy more CCIV or Should I Sell CCIV?

This is the more important question for many investors sitting on good profits. This trade does not carry the same us versus them emotions that came to be synonymous with the Gamestop (GME) trade. As the share price moves ever higher the risk-reward diminishes. Traders have different risk tolerances. Remember the worst-case scenario is capped at $10. CCIV cannot go bust or collapse. By law, SPAC's have to keep the cash raised from the IPO in trust and return it to shareholders after 2 years if no deal is done. 

So if you already own CCIV shares should you sell? Again this depends on your average entry price. If you are lucky enough to be sitting on 2-4 times your initial price then using a trailing stop can protect some profits. Some may decide if the price slides back below $20 or $25 then the probability of a merger is reducing so at least that still nets some profits. Or alternatively, many traders will sell 50-70% of their position, netting some profits and having a free ride on the balance. It is entirely up to each individual and depends on risk tolerance, needs, etc. Just be careful about entering a new position at this level. CCIV has had a sharp rise, yes a deal may happen, giving a short-term boost, but if it doesn't or if things drag on, make sure you do not over-leverage and lose cash you cannot afford to.

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