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Why SPAC Churchill Capital IV's Stock Is Higher Today

By John Rosevear - Feb 5, 2021 at 2:30PM

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There are good reasons to be bullish on Lucid Motors. But be very careful here.

What happened

Shares of special purpose acquisition company (SPAC) Churchill Capital IV (CCIV) were trading higher on Friday. Churchill is reportedly in talks to merge with electric-vehicle start-up Lucid Motors; its shares were moving up following remarks by Lucid's CEO on CNBC.

As of 1:15 p.m. EST, Churchill's shares were up about 15.1% from Thursday's closing price.

So what

Lucid Motors CEO Peter Rawlinson said that he couldn't comment on reports of talks with Churchill Capital during his appearance on CNBC on Friday morning. Churchill's stock price surged after Bloomberg reported on Jan. 11 that the two companies were in talks about a merger deal that would take Lucid public; but they fell earlier this week after The Wall Street Journal reported that a merger deal isn't imminent. 

A white Lucid Air, an electric luxury sedan, parked in the driveway of a home

Lucid's first model, an 800-horsepower luxury sedan called the Air, will begin shipping this summer. Image source: Lucid Motors.

Rawlinson had plenty to say about Lucid, however, and it was bullish for his company, at least. Some key points: 

  • "We're aiming, initially, unashamedly at the luxury space." Rawlinson doesn't see Tesla as a direct competitor, at least to start. Lucid's Air sedan is a high-end luxury car, with a starting price of around $70,000 and a top model priced at over $160,000. Demand is "overwhelming," he said, confirming that the first Airs will ship this summer. 
  • Lucid has completed "stage one" of its factory in Arizona. As is, the factory can build about 34,000 vehicles per year, Rawlinson said, but it can and will be expanded substantially from there. By phase four, in the mid-2020s, it'll be able to produce about 400,000 vehicles per year.
  • Rawlinson acknowledged that autos are a capital-intensive business, but said that Lucid has good access to capital via Saudi Arabia's sovereign wealth fund, which is a long-term strategic investor in Lucid.

One more note of interest to auto investors following the electric-vehicle space: Rawlinson argued (as he has for a while) that electric-vehicle makers should be judged by the efficiency of their vehicles, not by range. "How far can I go per kilowatt hour? We can go well over 4 miles per kilowatt hour," he said. "This is world-class technology, here in the United States."

Now what

Lucid is an exciting company, one that I've watched with considerable interest for several years. But investors should be very clear on this: As of right now, there's no deal in place between Lucid and Churchill Capital IV, and there may never be a deal between them.

Buying shares of any new automaker is risky. But it becomes double-extra-risky when you're buying shares of a company that has yet to announce a deal with the emerging automaker that you're hoping to own. Be very careful with this one. 

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