The exterior of the Lucid Air sedan, which launched on September 9, 2020 as the company’s first production vehicle.
Lucid
Shares of Churchill Capital IV fell for a second consecutive day on Wednesday after announcing an agreement Monday night to bring the electric vehicle company Lucid Public through a reverse merger.
The stock traded down 19.6% to $ 28.32 during the afternoon trading, which contributed to a turbulent week for the special-purpose acquisition firm, also known as a SPAC, of well-known investor Michael Klein. The stock was 38.6% lower on Tuesday. The back-to-back decline follows a nearly five-fold rise in the share price since early January when the companies were first reported in talks.
Lucid CEO Peter Rawlinson attributed the drop in share price on Tuesday to media reports that the company’s expected valuation was between $ 12 billion and $ 15 billion, leading to an initial misunderstanding of the announced transaction by investors. .
“I think the market does not yet have to properly understand what’s going on,” he told CNBC in a Zoom interview. “For me, what was announced overnight was fantastically positive compared to anything previously reported.”
The Wall Street Journal highlights the confusion Wednesday in an article with the first graph of the story that says, “Is electric vehicle company Lucid Motors worth $ 11.75 billion, $ 24 billion or $ 57 billion?”
The equity value of the transaction is $ 16.3 billion and will pay existing Lucid shareholders $ 11.75 billion. That put Lucid at the first $ 24 billion pro-forma valuation. Pending shareholder approval, it will generate approximately $ 4.4 billion in cash for expansion plans for Lucid, including at its current plant in Arizona.
The agreement between Lucid and Churchill in Newark, California, is the largest in a series of such ties with EV companies and A SPACE. Previous SPACs with EV companies such as Nikola, Fisker and Lordstown Motors have received pro forma valuations of less than $ 4 billion.
A SPAC is a blank check company, established as an alternative to a stock exchange, because it raises funds to buy something but has no operations of its own. These are companies with virtually no assets other than cash, and they trade on a stock exchange before merging with private companies.
The company is expected to be listed on the New York Stock Exchange under the text “LCID” after the transaction closed in the second quarter of this year.