Churchill Capital IV (CCIV) stock is arguably the most popular SPAC currently. It's taking EV (electric vehicle) startup Lucid Motors public and the transaction is expected to be completed in June. However, CCIV stock seems to get the cold shoulder again near the $20 price level.
CCIV stock rose as high as $65 even before the merger. However, the rest as they say is history. It fell sharply after the merger announcement after the PIPE (private investment in public equity) deal valued Lucid Motors at $24 billion. To be fair to CCIV sponsors, they priced the PIPE at $15 or a 50 percent premium over the IPO price.
CCIV stock has dropped sharply.
Ever since the CCIV-Lucid Motors merger was announced, CCIV stock has looked weak. It has continued to make lower lows while failing to break above the previous highs. It made a post-merger announcement low of $17.25 on May 13. However, there was some bottom fishing in the stock and it soon went past the $20 price level.
While CCIV stock managed to move to the low to mid $20s on previous occasions, it seems to be getting jittery this time just after crossing the $20 price level. That doesn't bode well for the bullish narrative for CCIV ahead of its merger with Lucid Motors.
CCIV stock technical analysis
Apart from forming a bearish pattern with lower lows and lower highs, CCIV could face resistance at the 50-day SMA (simple moving average) that currently stands at $21.21. The stock has failed to break above the 50-day SMA multiple times. Overall, CCIV stock looks bearish to me on the charts.
CCIV stock looks overvalued ahead of the Lucid Motors merger.
At CCIV's $20 stock price, Lucid Motors is valued at a pro forma market capitalization of $32 billion, which is higher than Xpeng Motors and Li Auto. Both of these companies are delivering vehicles and making double-digit gross margins.
NIO has a market capitalization of just under $49 billion, which is around 1.5x Lucid Motors’ implied market cap. NIO’s gross margins have almost reached 20 percent and it even posted a positive free cash flow in the first quarter of 2021. Lucid is far behind the curve compared to NIO when it comes to vehicle delivery, gross margins, or even operating cash flows.
Legacy automakers are back
Ford unveiled its F-150 electric Lightning model and the stock spiked. The model won't compete with Lucid Motors’ upcoming sedan called Air. However, it shows that legacy automakers are very much in the game.
With decades of manufacturing expertise, a sprawling sales and distribution network, and a connection with consumers, legacy automakers could give pure-play EV companies including Tesla, NIO, and Lucid Motors a tough fight.
CCIV might be peaking near $20.
EV stocks have been moving in tandem. Over the last week, we’ve seen a recovery in all EV names including Tesla and NIO. However, CCIV stock might be peaking out near the $20 price level. There don’t seem any real triggers that can take the stock higher from these levels.
While I find Lucid Motors as a worthy competitor to both Tesla and NIO, the price is simply not right to buy the stock now. If you are patient and can wait for a bit, the stock could give you good buying opportunities, both before and after the merger.