Churchill Capital IV (CCIV) Stock Price and News: Lucid merger nears, CCIV opens above $60

Update, February 19: Shares in CCIV continued to be bulled up by traders on Friday. CCIV shares opened up 4% above $60 on Friday. No new news has come to light yet about the Churchill Capital Lucid Motors merger but traders are backing the confirmation being imminent. CCIV shares are now up sixfold from their IPO booking nice returns for the many retail investors.

Update Wednesday, February 17: Shares in CCIV continue to remain well bid in early trading on Wednesday. CCIV shares remain above $50 at $53.70 for a gain of just under two percent. 

See Churchill Capital a deep dive

Churchill Capital and Lucid merger latest news

Shares in Churchill Capital IV (CCIV) continued to perform strongly on Tuesday as traders jumped on a Reuters exclusive report stating the deal was nearing completion. Shares in Churchill understandably spiked on the news, quickly breaking above $50 to a high of $55 before closing near highs at $52.70.  Retail interest was again strong with Twitter and other social media platforms strongly following the progress. Rumours of a Lucid merger have following Churchill IV for all of 2021 since Bloomberg first reported the possibility back in early January.

Churchill Capital (CCIV) Lucid merger news

Michael Klein is the man behind  Churchill and he has strong connections with Lucid Motor's key executives and backers. Klein has worked with Lucid Motors CEO Peter Rawlinson on one of the biggest mergers in history, that of DuPont and Dow Chemical. Klein is a former top Citigroup executive and his own investment firm has previously advised the Saudi sovereign wealth fund, the Saudi Public Investment Fund (PIF). The Saudi PIF is one of the major backers of Lucid Motors with a stake of over 50%. So straight away that should make negotiations easier between parties who are familiar with each other and have a history of deal-making together.

Bloomberg first reported on the possibility of a deal between CCIV and Lucid Motors back in January. The Wall Street Journal had appeared to pour cold water on the prospects for a deal in early February saying the deal was not imminent. However, rumours have continued to swirl with the share price remaining strong throughout. Retail investors have continued to back CCIV and Lucid with many stating Lucid is the next Tesla. 

Churchill Capital PIPE

In order to complete the deal, Reuters is reporting that extra funding will be done via a Private Investment in a Public Entity (PIPE). This is basically a discounted share placing. Investors are given the opportunity to subscribe for shares in a company at a discounted price. The discount depends on investor demand etc. Usually, the discount is in the range of 5-10%. Shareholders will have the option to hold or sell these shares, often these investors will be required to not sell the shares for a certain period of time akin to a lock-up or blackout period. PIPE and share placements can lead to a certain form of gaming the system. Investors, hedge funds, etc can short sell shares in the company in the knowledge that they will be able to buy these shares back at a discount in the PIPE transaction. The lower short-sellers push the price the lower the price of the buyback and so the greater the profits. However, the risk in this situation is that the PIPE placing is oversubscribed and you are not able to buy back the full amount of your short position! 

In this case, it has been reported by Reuters that the CCIV PIPE transaction will be in the region of $1.5 billion. PIPE transactions are a speedy and efficient way of raising cash for companies. 

Churchill (CCIV) and Lucid forecast

Investors have been very strong on the Electric Vehicle sector with many comparing Lucid Motors to Tesla. If the merger between Churchill and Lucid Motors does go ahead the next step is how to value Lucid. For now, it is on the verge of delivering its first EV to customers. So there is little historical revenue, EPS, sales data etc. This is the next stage for investors. Once or if the merger proceeds you are an investor in Lucid Motors. Compare with the sector, look at other EV maker's historical averages, sales growth, etc and try to extrapolate and forecast for future Lucid sales growth, financials and valuation metrics. That will be the next stage! 

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