Please ensure Javascript is enabled for purposes of website accessibility

Why Churchill Capital Stock Skyrocketed 34% Last Month

By Chris Neiger - Mar 3, 2021 at 10:16AM

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 were excited about the potential deal between the company and Lucid Motors.

What happened

Shares of Churchill Capital (CCIV) popped 34.4% in February, according to data provided by S&P Global Market Intelligence, as investors anticipated the merger of Churchill Capital with the electric vehicle company Lucid Motors.

So what

Churchill Capital is a special-purpose acquisition company (SPAC). SPACs are publicly traded companies that exist specifically to eventually merge with private companies that want to go public. In January, rumors surfaced that Churchill Capital would be merging with Lucid Motors, an automaker specializing in electric cars, and the company's share price began climbing rapidly. 

Multicolored arrows pointing up.

Image source: Getty Images.

The rumors of the merger with Lucid caused Churchill Capital's share price to skyrocket 487% between Oct. 2020 and Feb. 18. 

But Churchill Capital's share price actually fell significantly once the official merger was announced on Feb. 22. The reason for the drop could be that investors were expecting a valuation of $15 billion for Lucid, but when the details of the merger were announced, Lucid was valued at $24 billion. 

Even with that share price decline after the announcement, Churchill Capital's stock was still up 34% at the end of February. 

Now what 

Churchill Capital and Lucid Motors will officially close their merger deal in the second quarter of this year. Investors appear to have calmed down a bit since the announcement, and Churchill Captital's stock is down just 1% so far this month. But investors should keep in mind that SPAC deals can cause a lot of volatility and that more share price swings could happen.

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 service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

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.