Expect Churchill Capital IV stock volatility until clarity on SPAC merger

Rumors swirl around Churchill Capital IV (SNEEZE:CCIV), a special acquisition company (SPAC), proposes Lucid Motors may soon be listed via a reverse merger with CCIV shares.

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The stock price has risen significantly since the beginning of 2021, after news headlines started and jumped from $ 10 to almost $ 40.

InvestorPlace readers are well versed with how hot SPACs have been over the past year. Yet this leap in CCIV stocks is quite important even in the SPAC space. Generally, a SPAC like CCIV jumps from around $ 10 to $ 15- $ 17 after the first announcement of a merger.

Therefore, momentum CCIV carried without confirming a deal is impressive. But we do not yet know that this reverse merger will happen. If you are a potential shareholder, it would be important to realize that the stocks are risky at this point. The early potential for a merger between the CCIV share and Lucid Motors may already be priced in the shares. Let’s see why.

CCIV Stock jumps on ‘New Tesla’ Tie-Up Talk

Why has the CCIV share price risen so much in recent weeks? It’s thanks Lucid Motors, seen as a new one Tesla (NASDAQ:TSLA) in the luxury electric vehicle (EV) market. Over the past year, the TSLA stock has returned over 400%. We have also seen how hot the EV market is in general. The expectation of a potential Tesla competing, as well as the progress in the EV market has attracted great interest in the shares of potential SPAC suitors.

California-based Lucid Motors is a car revenue group formerly known as Atieva. In a recent interview it CNBC, Lucid CEO Peter Rawlinson stated that orders for their first vehicle, Lucid Air, have been “overwhelming. “This first model is expected to be shipped in the summer.

Lucid has a first-phase plant ready in Arizona that can produce 34,000 vehicles a year, with the hope that by the mid-2020s they can produce 400,000 a year.

Often, the success (and the stock price movement) of a SPAC depends on who the management team is. Churchill Capital CEO Michael Klein, a Wall Street veteran, already has a few successful mergers on his record.

In January 2019, the group announced one fusion with Prepare Analytics, a leading global provider of comprehensive intellectual property and scientific information, analytical tools and services. In July 2020 Churchill Capital Corp III entered into an agreement of 11 billion. dollars with the health company MultiPlan (SNEEZE:MPLN), in one of the largest deals on a SPAC.

In other words, even though CCIV shares have no business, the management team has experience in the SPAC space to potentially make the next trade a success. In addition, Saudi Arabia Sovereign wealth fund is a strategic investor and Lucid. Therefore, the company has access to significant amounts of capital. Despite the frothy rating of the company, investors are excited about the outlook.

The bottom line of the CCIV stock

There are clear risks that need to be outlined before putting your money into CCIV shares. As mentioned, there is currently no agreement between these two companies and we know this rumors are the main catalyst for the stock price rise.

An old investment saying that one should buy the rumor and sell the fact. An event, like a potential merger, is often priced at the stock price before it is confirmed.

We must also keep in mind that Lucid is still a start-up car company. The prospects can be exciting. A successful merger can be the start of a very appealing investment, one that many will keep an eye on. However, large amounts of capital and time are required before significant revenues are made.

On the other hand, in the coming weeks, if no agreement is reached, the CCIV share price could also fall significantly. Therefore, potential investors should carefully examine the risk / return profile by investing in the company at this time.

At the date of publication, Tezcan Gecgil held (neither directly nor indirectly) any positions in the securities mentioned in this article.

Tezcan Gecgil has worked in investment management for over two decades in the US and UK In addition to the formal higher education in the field, she has also completed all 3 levels of the CMT (Chartered Market Technician) study. Her passion is options trading based on technical analysis of fundamentally strong companies. She especially enjoys creating weekly covered calls for revenue generation.

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