Here we go again…another “SPAC Attack,” this time on the Churchill Capitol Corp IV (CCIV)and Lucid Motors Merger Announcement. You may be wondering…”what in the world, why is the stock down on the actual merger announcement?” Don’t worry, you are not the only one. Many in the Parabolically trading circle have experienced just this situation several times. If you bought the “top” today, you may want to subscribe and join our discord chat and subscriber list to avoid such a mistake (CCIV is down 30% so far after hours). Do not fret, though, we will explain what is going on and why Churchill Capital Corp IV Stock Is Plummeting on Lucid Motors Merger Announcement.
What Was The News?
In the brave new world of “SPACs” you might want to keep a tight lid on your risk. These are ultraspeculative stocks that can move from + or – 30%/day. They are very difficult to predict for new investors, but once you get a handle on them, they are among the most profitable stocks to trade.
So what was the news that broke the camel’s back?
According to Teslarati,
Lucid Motors and special purpose acquisition company (SPAC) Churchill Capital have announced that they have come to terms with a definitive merger agreement. Lucid will officially go public after rumors have circulated recently, and the two companies will combine at a transition equity value of $11.75 billion, the companies announced in a statement earlier today.
Lucid is valued at an initial pr0-forma equity value of approximately $24 billion at the Private Investment in Public Equity, or PIPE price of $15.00 per share. Additionally, this will provide Lucid with around $4.4 billion in cash, assuming no existing Churchill Capital shares are redeemed for cash at closing, the statement says. CCIV is contributing around $2.1 billion cash and a $2.5 billion fully committed pipe with an investor lock-up provision that will bind holders well beyond closing.
Basically, the merger was announced today officially, following months of rumors about the two companies.
Why Is CCIV Plummeting After Hours?
You want to know why the stock is plummeting? The truth is, you already know.
There is a very, very simple trading strategy that “Smart Money” follows to screw over retail traders.
Very simply put, it is called “buy the rumor, sell the fact.”
But you already knew that. Congrats to those who caught the rumor, and thoughts and prayers for those who bought near the top today and held.
This buy the rumor, sell the fact scenario has been somewhat frequent in the world of SPACs. Just check out DM and LAZR. They caught a beating on their merger announcements as well, following a massive run up, so it was somewhat obvious to us that the Lucid merger would be no different.
Let’s put this into perspective, and take an educated guess on the future of CCIV Stock.
As of the close Monday, February 22, 2021, CCIV stock closed at $57.37, down from the all time high of $64. According to Yahoo Finance, that would give the company a valuation of approximately $15 Billion USD.
Quite a lofty valuation for a company that does not mass produce millions of vehicles.
From the launch of the SPAC to today, the stock has shot up 650%+. #Gains.
Unfortunately, the merger announcement set the stock back about 30% after hours.
But what is to come for Lucid Motors (and the stock) in the future?
Lucid Motors Prediction
In our opinion, this stock will find a nice resting place for consolidation of those massive gains. Most likely in the $30 range +/_ $5. Unless there is major fraud, like in some of the other SPAC names (allegedly), this stock is not going anywhere.
If you are averaged in below $25, it would not be wise to panic sell. Remember, this is a company with some strong prospects. Check out their Media page to stay up to date.
Although in the very long term, the electric vehicle race will probably shake out the losers, in the medium term, electric vehicle stocks will most likely remain very strong.
In all likelihood, electric vehicles are the future. However, because investors are ferociously hungry for these stocks, the environment has created way too many competitors.
Many will be eliminated, and many will grow exponentially.
For now, we think CCIV Stock is still a hold on the Lucid Motors Merger news.
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