Lucid Motors, the company which, through a SPAC merger with Churchill Capital IV (NYSE:CCIV), is a stock with a ton of hype at the moment. To date, the CCIV share has remained dramatically higher since the SPAC became known. However, shares in the CCIV shares are down 60% lower than their 52-week highs a few weeks ago. Today, at the time of writing, equities are down more than 6% amid strong downward momentum.
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This is why SPAC investors can currently be seduced by this decline as a buying opportunity.
News is on its way
A tweet today from Lucid Motors that a new entertainment system in the vehicle will be announced at the SXSW conference on March 17, investors apparently missed. This “LucidAir x Dolby Atmos experience” is called a “world first” and is definitely intriguing.
Introduction of the #LucidAir x @Dolby Atmos experience – a new, immersive way to present entertainment in the vehicle. Read more about our next world’s first on March 17 at @sxsw. #LucidxDolby pic.twitter.com/Rv9u5TC51V
– Lucid Motors (@LucidMotors) March 3, 2021
The fact that this announcement will be made during the SXSW conference is also interesting. It seems that in the early stages of product and market development, businesses are relying more on innovative platforms to get their message across. The SXSW Conference contains’ a variety of tracks with which participants can explore the following in the world of film, culture, music and technology. SXSW proves that the most unexpected discoveries happen when diverse topics and people come together. ”
This year, this conference presents a digital experience as part of the company’s offerings. It’s an interesting platform for Lucid to attract new eyeballs from investors interested in ‘unexpected discoveries’, which contribute to the plot of this covert announcement.
Valuation issues that weigh on CCIV inventory
It seems that the most important factor currently suppressing CCIV shares is the current valuation of the company.
Lucid is still a pre-commercial company, which is expected to launch its Lucid Air overall sedan later this year. This EV launch is one of the most anticipated at the moment, as evidenced by the move we have seen in the CCIV stock since the recent stock market move. Even the best companies can seem overvalued from time to time.
The $ 2.5 billion PIPE financing done for this transaction was done at $ 15 per share, a 50% premium to the net asset value of CCIV. At the current price of more than $ 25, the market is currently pricing a premium of more than 100% of the net asset value. It was previously much higher before the sale. However, some investors seem to be surprised by the valuations that different EV players are claiming in the market today.
Over the past few weeks, it seems that a broader sale of EV is the cause of higher volatility for SPACs such as CCIV shares. That said, those growing on EV growth want to consider CCIV stocks at these levels. This is a high-risk reward for long-term EV investors who want to enter the next Tesla on the ground floor.
At the date of publication, Chris MacDonald (directly or indirectly) held no positions in the securities mentioned in this article.