Is Merger with Lucid Motors a Clear Win for CCIV?

·4 min read

Investors in up-and-coming EV plays have likely already considered Churchill Capital (CCIV), the company that’s set to take Lucid Motors public this year. This SPAC merger is one of the most highly-anticipated of the year, and brings with it a tremendous amount of investor enthusiasm among those seeking a true rival for current incumbent Tesla (TSLA).

Lucid’s core flagship EV product, the Lucid Air, brings a level of luxury and style to the EV market that is reminiscent of Tesla’s Model S. When many investors first saw the Model S, the thought that likely came to mind is “that’s an EV I’d buy.” Indeed, Lucid’s product quality, design, and feel are among the key reasons investors and consumers are gravitating toward this play today.

However, the question remains whether CCIV stock remains a solid buy before the prospective merger, or if investors should wait and see on what will be LCID stock. (See CCIV stock charts on TipRanks)

Let’s take a look.

CCIV Shareholder Vote and Merger Anticipation Upcoming

Among the key things investors in CCIV stock will be watching this week is the company’s shareholder vote on the SPAC merger, which is scheduled for July 22. Given the fact that the shareholder vote is only a few days away, it’s understandable that anticipation is once again building for this early-stage EV player.

In addition to the announcement of the shareholder vote, Churchill made clear the company will be announcing a board filled with top executives from the finance and auto space. These announcements have done little to buoy CCIV stock in advance of the merger vote, with CCIV stock losing 12% of its value last week alone.

That said, this week could be a big one for investors. Should the merger be approved, this is an EV play with the potential to do some serious rebounding in the near-term. Right now, it appears the market is content to sell the news, and then to wait until the dust settles before offering judgment on this stock. For aggressive growth investors willing to speculate on optimism prevailing this week and next, perhaps now is a great entry point for considering CCIV stock.

Should the merger be approved by investors (which it likely will be), CCIV will cease to trade, and shares will be converted to LCID, which will trade on the NYSE starting July 23.

Shareholder Call Providing Little Optimism for Lucid

Interestingly, this past week, Churchill and Lucid held a shareholder call to discuss updates prior to this week’s merger vote. In advance of the call, the company filed its slide deck with the SEC, prompting almost immediate selling of this stock.

To be honest, this selling pressure was a bit of a surprise. The company reiterated its aggressive growth targets, including a 20,000 unit target for 2022, rising to more than 250,000 vehicles per year by 2026. However, it appears the market was looking for more from this presentation.

Additionally, reservation data shows that the Lucid Air has more than 10,000 existing preorders standing. For a company that’s likely to only produce a few hundred this year, demand going into 2022 appears to be strong. Indeed, how this vehicle performs and the company’s ability to market to a broader base remain key questions for investors right now. After all, a run rate of 250,000+ vehicles in 2026 and beyond is an aggressive target. That is, considering the company’s pre-production run of only 89 vehicles has just been completed, investors are working with a small sample size right now from which to extrapolate.

Lucid announced a couple other items of interest that might intrigue investors. For one, the company’s energy storage system prototype appears to be progressing positively. Additionally, Lucid announced the company would be pulling forward a substantial amount of Capex to help accelerate production. If these investments prove lucrative for investors, it’s possible we could see some momentum start to form in CCIV/LCID stock from here.

What Analysts are Saying about CCIV Stock

According to TipRanks’ Smart Score, which represents a compilation of sentiments about the stock, Nano Dimension earns a 4, or Neutral, rating. That means the stock is likely to perform inline with overall market performance.

Bottom Line on CCIV

Investors in high-growth EV stocks like the story behind Lucid Motors. This is a company that’s proposing an alternative to incumbent Tesla in the luxury EV space. Given the growth rate we’re likely to see in this segment over time, Lucid certainly appears to be a company with a shot of providing Tesla a run for its money in this segment.

That said, this is still an early-stage company that investors are betting on. Should everything go perfectly on-track and on-budget, perhaps Lucid Motors could be a “Tesla-like” opportunity from here. However, with so many unknowns right now in the EV space, it appears investors are content to stay on the sidelines for now.

Disclosure: Chris MacDonald held no position in any of the stocks mentioned in this article at the time of publication.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.