Here’s everything you need to know about Lucid Motors’ upcoming reverse merger with blank-check firm Churchill Capital IV Corp.
When rumors began to circulate in January that U.S.-based SPAC (special purpose acquisition company) Churchill Capital Corp IV (NYSE: CCIV) would be taking Lucid Motors public, its stock soared. In fact, until yesterday, CCIV stock was up more than 470% year-to-date, before plunging more than 40% at market open today as investors perceived its valuation as too high.
We’re not here to talk about that though, as we’re only interested in the terms of the deal that will see Lucid Motors become Tesla’s (NASDAQ: TSLA) biggest domestic pure-play threat.
When can I buy Lucid Motors stock?
No date has been confirmed for the reverse merger to take place, but experts have said to expect the deal to close sometime in Q2 of this year.
What price is Lucid Motors going public at?
The deal will generate $4.4 billion in cash for Lucid, and combined with private investments, its value stands at around $24 billion. Together with CCIV’s current market cap as of February 22, the combined company could have a value of roughly $70 billion.
With CCIV’s share price alone already hitting $70 in recent weeks off the back of Lucid rumors, and given the performance of other reverse mergers and IPOs over the past year, investors can expect a high price per share when we eventually get more details.
Lucid Motors Financials
Like any niche sector startup, there’s not a whole lot of cash to discuss here, and as Lucid Motors is yet to actually deliver vehicles, there’s even less to go on.
Don’t be turned off just yet though, as Lucid Motors confirmed yesterday that it will begin deliveries for its luxury ‘Lucid Air’ sedan in Q2 this year with a starting price of $169,000. Similar to how Tesla first started, it will get these upscale deliveries out the door and expects to begin production of cheaper models within the next year.
According to its presentation yesterday, Lucid also forecasts deliveries of 20,000 vehicles in 2022, generating sales of $2.2 billion, with revenue rising to $5.5 billion and $9.9 billion in 2023 and 2024, respectively. The company foresees positive earnings before interest, taxes, depreciation, and amortization of $592 million in 2024.
Should I buy Lucid Motors stock?
“I really believe we’ve got the tech to pose competition (to Tesla) which is healthy,” Lucid CEO Peter Rawlinson stated when announcing the deal yesterday. “This gives us a very secure runway into 2023, to get the factory ready for the advent of Gravity (Lucid’s SUV project), and is giving us an absolute path to accelerate our trajectory.”
These are fighting words, and though it is far too early to see exactly what kind of company Lucid Motors will be, there is clearly a lot of promise. However, reverse mergers are a subtle business and we do not get all the information we normally would prior to a typical IPO process. Don’t forget that Nikola Motors (NASDAQ: NKLA) was a reverse merger, and we all saw how that turned out.
When it comes to investing in newly public companies, it’s always best to wait a couple of quarters and see how the land lies.
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