Churchill Capital IV skyrockets 50% after speculative deal with Lucid Motors

The electric vehicles sector has been blasting the media with news, IPOs, and improvements in the last year. The competition keeps growing among the EV companies and a new competitor is about to go public through a merger. According to Bloomberg NEF, EVs will cover 10% of the global vehicle sales by 2025, which will then increase to 28% by 2030. EVs are currently holding 3% of global sales.

Summary

  • Churchill Capital IV (NYSE: CCIV) is up 50% since the new merger deal speculation with Lucid Motors. The stock price is also up today in the pre-market 7.90% at the price of $19.81.
  • Lucid Motors Inc is targeting the luxury end of the market with their main model Air vehicle. It is planning to start deliveries in the U.S in the second quarter of a cheaper type of EV sedan.
  • The EV company is backed by the Saudi Arabia sovereign wealth fund that has invested over $1 billion.

 

Churchill Capital IV

Churchill Capital IV (NYSE: CCIV) a company based in New York founded in 2020 is a special purpose acquisition company (SPAC). The company belongs to Michael Klein that has spent a long career on Wall Street as a Chief executive is behind the company. He has been a Citigroup banker that made a turn creating shell companies, listing them on the stock market.

According to Bloomberg, Lucid Motors Inc. is in talks with the company to go public through a merger. Churchill Capital IV has managed to raise $2 billion in the last year. People who shared details have been asked to remain private and said that the transaction will be valued at $15 billion.

The first Churchill’s SPAC bought Clarivate (CCC) whereas Churchill III (CCXX) bought Multiplan (MPLN). In addition, Churchill II (CCX) announced another deal with Skillsoft and Global Knowledge.

The stock price has jumped as much as 50% and is at the moment trading at $18.36. What is more, the SPAC has previously reported to Bloomberg News that is interested in acquiring a stake in AT&T (NYSE: T) Inc’s Direct TV satellite television business.

churchill article
Volume rise on CCIV - taken from Ycharts

The chart above is a showing clearly that the volume started picking up on the 11th of January, which is when the first news about the deal was announced. The volume touched its highest high a few days after the news rolled out. Before the news the volatility was non-existent (flat line) as you can see for yourself).

Lucid Motors Inc

Lucid Motors Inc is an American automotive company founded in 2007. In 2020, the company started developing its first electric vehicle, Lucid Air. This is a cheaper version of the upcoming EV sedan in October. The company is targeting the luxury end of the market and its chief executive officer, Peter Rawlison, used to be Tesla’s chief engineer for the Model S.

Since its creation, the company spent years focusing on battery technology rather than luxury car development. The name was changed from Atieva to Lucid Motors in 2016 and began working on its main model, Air. The company is backed by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund which invested $1 billion in the company.

The company plans to start deliveries in the second quarter in the U.S with a car cost of $169,000. Like the Tesla (TSLA) and Porsche, the Lucid is an electric sedan. Some have published that Tesla should fear Lucid, due to the fact that the Air vehicle has a capacity maximum of 517 miles, passing the Porsche that has a 201-mile distance and conquering the Tesla which can go 402 miles on one charge.

Taking this into consideration Tesla and Porsche should be worried since all three are competing in the same type of cars.

Bottom Line

In a market environment that is often driven by speculation instead of fundamentals, this deal has also not been confirmed. Although they might have not reached a deal yet and they might not, but they are in the process of talks. The deal discussion is to find adequate funding to support the company. I would like to add that if the buzz of speculation is now driving the stock price up if a deal is announced before the volume dies the stock will continue rallying up.

Disclaimer – I/we have no position in any stock mentioned. I wrote this article myself, and it expresses my personal opinions. I am not receiving any compensation for it, other than FDGT Academy. I do not have or had in the past any business relationship with any company that is mentioned in the above article.

Natalia C. - Junior Analyst at FDGT Academy

Natalia C. - Junior Analyst at FDGT Academy

I am a stock analyst/investor with prior experience and knowledge to BSc Accounting and Finance. After completing my degree and exposure to the accounting firms I decided that the direction I should choose is towards the Investment world. I completed my masters in Investment Management where it gave me solid fundamentals to build my career on. I have examined a lot of different aspects of investment, from REITS, derivatives, currencies, bonds, equity and hedge funds. I never stopped learning about the market which is why I can analyze and write articles for FDGT community always personally opinionated. My passion are green energy and electric vehicles stocks as a whole. I also had my share of analyzing the work form home stocks that are coming to take over in the upcoming years.