What happened

Shares of Churchill Capital IV (CCIV) jumped another 23% today, as of 2:30 p.m. EST. That brings 2021 gains to more than 200% for the special purpose acquisition company (SPAC) -- even though it hasn't yet invested in an operating business. 

CCIV Chart

CCIV data by YCharts

So what

The outsized move in Churchill Capital IV started on Jan. 11 when rumors began to spread that it was in talks to merge with luxury electric vehicle (EV) maker Lucid Motors. Bloomberg initially reported the SPAC formed by former Citigroup banker and Wall Street veteran Michael Klein was reportedly in talks to take Lucid Motors public through a transaction that could be valued at up to $15 billion. 

Lucid Air EV

Lucid Air EV. Image source: Lucid Motors.

Now what

Since then, The Financial Times reported that Lucid is in talks with Saudi Arabia's sovereign wealth fund to build a new EV factory in the kingdom. The Saudi fund invested more than $1 billion in 2018, which also makes it questionable whether the automaker would need to do a deal with Churchill Capital for funding. 

If a combination were to be announced, and Bloomberg's valuation estimate is close, the question for current investors is what price they're getting to hold a stake in Lucid Motors. At today's share price of over $30, that would mean a greater than $45 billion value on the company. Investors should weigh that before buying into Churchill Capital IV now, especially with the downside that exists should no deal come to fruition.