Exterior of the Lucid Air sedan, which debuted on September 9, 2020 as the company’s first production vehicle.
Lucid
Churchill Capital IV’s stock continued to plummet for the second consecutive day on Wednesday after announcing a deal on Monday night to bring the electric vehicle company Lucid to the public through a reverse merger.
The shares fell by 19.6% during midday trading to $ 28.32, adding to a tumultuous week for the special purpose acquisition company, also known as SPAC, by well-known investor Michael Klein. The stock fell 38.6% on Tuesday. The consecutive declines have followed a nearly five-fold increase in stock prices since the beginning of January, when it was first reported that companies were in talks.
Lucid CEO Peter Rawlinson attributed the drop in stock prices on Tuesday to media reports that the company’s expected valuation was between $ 12 billion and $ 15 billion, leading to a misunderstanding initial report on the agreement announced by investors.
“I think the market has not yet properly understood what is going on,” he told CNBC in an interview with Zoom. “Because for me, what was announced during the night was fantastically positive compared to everything that had been reported before.”
The Wall Street Journal highlighted the confusion in an article on Wednesday with the first chart in history saying, “Is electric vehicle company Lucid Motors worth $ 11.75 billion, $ 24 billion or $ 57 billion?”
The equity value of the deal is $ 16.3 billion and would pay Lucid’s current shareholders $ 11.75 billion. She evaluated Lucid in an initial pro-forma valuation of $ 24 billion. Pending shareholder approval, it would generate about $ 4.4 billion in cash for expansion plans for Lucid, including its current plant in Arizona.
The deal between Lucid and Churchill, based in Newark, California, is the largest in a series of deals involving EV companies and a SPAC. The previous SPAC negotiates with EV start-ups, such as Nikola, Fisker and Lordstown Motors, which obtained pro forma appraisals of less than $ 4 billion.
SPAC is a blank check company, formed as an alternative to an IPO, because it raises funds to buy something, but does not have its own operations. They are companies essentially without assets, except for money, and they trade on the stock exchange before merging with private companies.
The company is expected to be listed on the New York Stock Exchange under the ticker “LCID” after closing the deal in the second quarter of this year.