Please ensure Javascript is enabled for purposes of website accessibility

Why Churchill Capital IV Stock Dropped Today

By Howard Smith - Feb 8, 2021 at 3:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are anxiously speculating whether the SPAC will announce a tie-up with Lucid Motors.

What happened

Shares of Churchill Capital IV (CCIV) dropped as much as 12% on Monday before closing the session with a decline of 5.5%. The special purpose acquisition company (SPAC) has been a target of rumors for several weeks, and the latest one dove up shares to end last week's trading on Friday. 

So what

The blank-check company has been rumored to be on the verge of a merger with luxury electric-vehicle (EV) maker Lucid Motors. Lucid chief executive and technology officer Peter Rawlinson said in a CNBC interview on Friday that he couldn't confirm or deny the rumors of a merger that would take Lucid public. But his lack of commitment helped continue the recent higher share movement of Churchill Capital. 

Some investors today are rethinking the valuation of the company, which still has no operating business. There are also no definite indications of a merger with Lucid Motors.

Rear view of potential new Lucid SUV model.

A Lucid SUV model may follow the luxury sedan. Image source: Lucid Motors.

Now what

Bloomberg initially reported in early January that 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. Investor interest stems from the Lucid Air luxury sedan, which will be available beginning this spring with over 1,000 horsepower and a battery range of 517 miles.

Churchill Capital stock has moved 150% higher since then, making the valuation of a merged company, should it occur, more than triple where a deal would set a value. Investors today are shedding some shares while the price is high and because of the continued uncertainty of whether a deal will even occur. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Churchill Capital Corp IV Stock Quote
Churchill Capital Corp IV
CCIV

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.