What happened

Shares of special purpose acquisition company (SPAC) Churchill Capital IV (CCIV) started a sharp increase on Jan. 11 when rumors that it was in talks to merge with luxury electric vehicle (EV) maker Lucid Motors began to spread. 

The daily swings in the stock continue today, but to the downside. As of 10:40 a.m. EST Wednesday, shares in Churchill Capital were down 9%, after having dropped more than 16% earlier in the session. 

So what

In addition to the merger rumor, news that Lucid was in talks with Saudi Arabia's sovereign wealth fund to build a new EV factory in the kingdom spurred strong gains in Churchill Capital shares earlier this week. The Saudi fund is already a large investor in Lucid Motors. 

Today's drop in Churchill Capital brings the stock back to where it was before the jump on the Lucid Saudi factory news.

Lucid Motors SUV

Image source: Lucid Motors.

Now what

Bloomberg originally reported the rumor of talks between Lucid Motors and the SPAC formed by Wall Street veteran Michael Klein. The report indicated a transaction that could be valued at up to $15 billion. But the transaction doesn't necessarily make sense for Lucid. The start-up already received more than $1 billion in 2018 from the Saudi fund that has helped finance its Arizona manufacturing plant. That facility is expected to begin producing the company's initial Air luxury sedan model this spring. 

Investors may be wondering if a tie-up with Churchill Capital will, in fact, ever happen for Lucid. If it doesn't, the almost 70% gains in Churchill Capital's shares since the rumor surfaced may completely evaporate.