what happened
Shares of Churchill Capital IV (NYSE: CCIV) fell 18.5% on Wednesday following the special-purpose acquisition agreement with electric vehicle maker Lucid Motors.
Approximately
Churchill’s share price rose to a high of $ 64.86 on February 18 following reports that the SPAC was in talks to merge with Lucid. Since the two companies officially made their merger deal on Monday, Churchill’s shares have shaken off about half of their value.
Churchill Capital IV’s share price has fallen sharply since announcing its deal with Lucid Motors. Image Source: Getty Images.
Many investors were excited about the prospect of owning a piece of Lucid via their investment in Churchill. The company’s luxury electric vehicles are expected to compete with those of Tesla (NASDAQ: TSLA). Lucid is led by Peter Rawlinson, who previously served as chief engineer of Tesla for his popular Model S sedan.
Unfortunately, Churchill’s shareholders were not so pleased when they were made aware of the terms of its merger with Lucid.
Now what
The deal values Lucid at $ 24 billion. Churchill’s shareholders will own 16.1% of Lucid after the merger. So what is the problem? Well, investors offered Churchill’s market capitalization up to about $ 15 billion before announcing the merger.
The stock market can sometimes be irrational, but it eventually repairs its mistakes. The market seems to be doing just that by lowering the price of Churchill’s shares.