Please ensure Javascript is enabled for purposes of website accessibility

Why Churchill Capital Corp IV Stock Lost 25% Last Month

By Jeremy Bowman - Updated Apr 6, 2021 at 3:04PM

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

Shares of the Lucid Motors owner pulled back on a broader rotation in the market.

What happened

Shares of Churchill Capital Corp IV (CCIV) were pulling back last month as investors rotated out of high-priced growth stocks like those in the electric vehicle (EV) sector and moved into value stocks and cyclical companies likely to do well in the recovery.

Churchill Capital, a special purpose acquisition company (SPAC) that acquired EV maker Lucid Motors in February, was one of those hard-hit growth stocks, and ended March down 25%, according to data from S&P Global Market Intelligence

The Lucid Air sedan

The Lucid Air. Image source: Lucid Motors.

The chart below shows the stock's trajectory for the month. 

CCIV Chart

CCIV data by YCharts.

So what

Churchill Capital shares plunged in February when the SPAC announced its merger with Lucid Motors, as it became clear that investors had bid CCIV shares to unreasonable levels, up more than 400% from a starting point of $10. The timing of the deal also came shortly after the Nasdaq peaked, and tech stocks and growth stocks began to pull back as interest rates rose.

That pattern accelerated in the first week of March as CCIV stock plunged 28% as the Nasdaq bottomed out and interest rates churned higher. Shares rebounded the following week, though there was no news out on the company, but the stock slumped again through the second half of March. 

There was little news out on the stock over the month, but CCIV seemed to move in tandem with other EV makers, including Nio and Nikola, which finished March down 15% and 23%, respectively, a reflection that some of the air in the EV bubble may be starting to leak out.

Now what

Lucid Motors has yet to release a vehicle, and the company is targeting the second half of 2021 for its debut luxury sedan, the Lucid Air. The stock currently has an implied market cap around $40 billion, meaning high expectations are priced into the release -- though given the success of Tesla, the stock has plenty of upside if the EV market retains its current valuation.

Expect the stock to continue to be volatile as investors debate the prospects of an EV stock that is still in its development stages without a product on the market yet.

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
Tesla, Inc. Stock Quote
Tesla, Inc.
$759.63 (7.33%) $51.90
Nio Inc. Stock Quote
Nio Inc.
$16.57 (3.37%) $0.54
Nikola Corporation Stock Quote
Nikola Corporation
$7.19 (6.05%) $0.41

*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
S&P 500 Returns

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.