Lucid Motors, the company reaching the market through a SPAC merger with Churchill Capital IV (NYSE:CCIV), is a stock with a lot of hype at the moment. So far, CCIV’s shares are still up since SPAC went public. However, CCIV’s shares fell more than 60% from a 52-week high. Today, stocks fell more than 6% at the time of writing, amid what appears to be a strong bearish momentum.
Source: ggTravelDiary / Shutterstock.com
See why SPAC investors can be attracted by this drop as a buying opportunity now.
News on the way
ONE tweet today from Lucid Motors, that a new vehicle entertainment system will be announced on March 17 at the SXSW conference, apparently missed investors. This “LucidAir x Dolby Atmos experience” is being dubbed “first in the world” and is certainly intriguing.
Introducing the #LucidAir x @Dolby Atmos Experience – a new and engaging way to imagine entertainment inside a vehicle. Find out more about the first of our next world on March 17 at @sxsw. #LucidxDolby pic.twitter.com/Rv9u5TC51V
– Lucid Motors (@LucidMotors) March 3, 2021
The fact that this announcement will be made at the SXSW conference is interesting as well. It seems that companies still in the early stages of product and market development are relying more on innovative platforms to get their message across. The SXSW conference features “a variety of tracks that allow participants to explore what is to come in the world of cinema, culture, music and technology. SXSW proves that the most unexpected discoveries happen when different topics and people come together. “
This conference is offering a digital experience as part of the company’s offerings this year. It is an interesting platform for Lucid to attract new eyes from investors interested in “unexpected discoveries”, adding to the intrigue of this veiled announcement.
Assessment of weight concerns in the CCIV stock
It seems that the main factor that depresses CCIV’s shares at the moment is the company’s current valuation.
Lucid is still a pre-commercial company, expecting to launch its all-electric Lucid Air sedan later this year. This EV launch is one of the most anticipated now, as evidenced by the movement we’ve seen in CCIV’s shares since its recent IPO. However, even the best companies can seem overvalued from time to time.
The $ 2.5 billion PIPE financing made for this deal was made at $ 15 per share, a 50% premium on CCIV’s net asset value. With the current price of more than $ 25, the market is pricing a premium well over 100% of the NAV right now. This had been much greater before the liquidation. However, some investors seem to be surprised by the ratings that several EV players are demanding in the market today.
A broader sale of EV in the past few weeks seems to be the cause for higher volatility drops for SPACs like CCIV stocks now. That said, those optimistic about EV growth may want to consider the stock of CCIV at these levels. This is a high-risk, high-reward game for long-term EV investors looking to enter the “next Tesla” on the ground floor.
As of the date of publication, Chris MacDonald did not (directly or indirectly) hold any positions in the securities mentioned in this article.