The exterior of the Lucid Air sedan, which debuted on September 9, 2020 as the company’s first production vehicle.
Lucid
Shares of Churchill Capital IV fell on Wednesday for the second day in a row, after announcing an agreement on Monday to bring the public of the electric vehicle company Lucid through a reverse merger.
The stock closed up 18.5% at $ 28.70 per share, adding to a tumultuous week for the special-purpose acquisition company, also known as SPAC, by well-known investor Michael Klein. Shares fell 38.6% on Tuesday. Back-to-back declines follow a nearly five-fold rise in share prices since early January, when companies were first reported to be in talks.
Lucid CEO Peter Rawlinson on Tuesday blamed a drop in the share price of media reports that the company’s expected valuation was between $ 12 billion and $ 15 billion, leading to an initial misunderstanding of the deal announced by investors.
“I think the market still doesn’t quite understand what’s going on,” he told CNBC in a Zoom interview. “Because for me, what was announced overnight was fantastically positive compared to anything previously reported.”
The Wall Street Journal highlighted the confusion in an article Wednesday with the first graphic of the story, saying, “Is the electric vehicle company Lucid Motors worth $ 11.75 billion, $ 24 billion or $ 57 billion?”
The value of the transaction’s equity is $ 16.3 billion and it would pay existing Lucid shareholders $ 11.75 billion. He valued Lucid at an initial pro-forma valuation of $ 24 billion. Pending shareholder approval, it will generate approximately $ 4.4 billion in cash for expansion plans for Lucid, including the current plant in Arizona.
The agreement between Lucid and Churchill in Newark, California, is the largest of a series of such links involving EV companies and a SPAC. The former SPAC handles EV start-ups such as Nikola, Fisker and Lordstown Motors, which have obtained pro-forma valuations of less than $ 4 billion.
An SPAC is a company with an incomplete check, formed as an alternative to an IPO, because it raises funds to buy something, but does not have its own operations. There are companies that have essentially no assets other than cash, and trade on the stock exchange before merging with private companies.
The company is expected to be listed on the New York Stock Exchange under the “LCID” check mark after the transaction is completed in the second quarter of this year.