A worker assembles the Lucid Air electric vehicle prototype, manufactured by Lucid Motors Inc., at the company’s headquarters in Newark, California, on Monday, August 3, 2020.
David Paul Morris | Bloomberg | Getty Images
The speculative fervor surrounding Lucid’s merger with special-purpose acquisition company Churchill Capital Corp IV was a difficult lesson for some SPAC investors.
Churchill Capital Corp IV’s shares plunged 38% on Tuesday after it announced it would merge with luxury electric car company Lucid and make it public. The California-based automaker caught the attention of investors who have high expectations for their electric vehicles that are not yet in production.
The deal is the largest in a series of mergers between electric vehicle companies and SPACs.
SPAC is a blank check company, formed as an alternative to an IPO. They are companies essentially without assets, except for money, and they trade on the stock exchange before merging with private companies.
“The market capitalization of the business was $ 65 billion, and instead of being valued for that, the deal closed at $ 24 billion,” said Peter Boockvar, director of investments at Bleakley Global Advisors, referring to the by Churchill-Lucid.
“It just shows that there are money hunters in some of these SPACs instead of people doing their homework,” he said.