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Is Churchill Capital Corp IV a buy after Lucid Motors deal?

Let’s take a look at a popular SPAC. Here is the breakdown on $CCIV, otherwise known as Churchill Capital IV Corp or soon to be Lucid Motors.

Current Price: $20.01

52/Wk High: $64.86

52/Wk Low: $9.60

Market Cap: $5.2 Billion

Read below for the breakdown!

Churchill Capital IV Corp ($CCIV) is a popular Special Purpose Acquisition Company (SPAC) that will soon become Lucid Motors.

Lucid Motors is an up-and-coming luxury electric vehicle company offering vehicles that abide by post luxury standards such as sustainability, refinement, and well-being.

Digging into the deal between Churchill Capital and Lucid Motors, the agreement values Lucid at a pro-forma equity level of $24 billion at the PIPE deal price of $15.00 per share.

In all, the agreement will provide Lucid with $4.4 billion in cash, which will assist the company in accelerating its next growth phase that includes manufacturing expansion in Arizona and the release of the Lucid Air sedan later this year.

Management was upbeat about the deal.

“Lucid is proud to be leading a new era of high-technology, high-efficiency zero-emission transportation,” CEO Peter Rawlinson said.

Taking a harsher look at Lucid itself, the management team is filled with experience, including former employees of Tesla, Jaguar, Lotus, Audi, Volkswagen, Rivian, Apple, Ford, Land Rover, GM, and many more.

Furthermore, Lucid Motors currently employs roughly 2,000 employees but expects to have employed around 3,000 by the end of FY 2022.

On the product front, Lucid’s self-proclaimed flagship product is the Lucid Air, an all-electric luxury sedan capable of 517 miles in range and up to 1080 horsepower. The Air will start at $69,900 and will be offered in four trim selections.

Lucid is also a pioneer on the technology front, boasting the best EV efficiency when compared to the likes of Tesla, Jaguar, Porsche, Audi, and Rivian.

Looking to the future, Lucid is working on Project Gravity, an all-electric luxury SUV and the company’s factory in Arizona will eventually be capable of manufacturing 365,000 units per year at scale.

Shifting into Lucid’s expectations, leadership is anticipating a production run-rate of over 500,000 units by 2030 and will first launch in North America this year.

As for revenues, Lucid expects 2022 revenues to total roughly $2.219 billion. Shortly thereafter, revenues are expected to expand quickly, with expected 2023 revenues totaling $5.532 billion and 2026 revenues totaling $22.756 billion.

On the profit front, below are the expectations for gross profit;

2022: $34 Million

2023: $1.149 Billion

2024: $2.125 Billion

2025: $3.096 Billion

2026: $5.280 Billion

Rounding out management’s expectations, FY 2022 EBITDA is expected to total $-1.090 billion while free cash flow is expected to land at $-2.759 billion.

Shifting into 2021, Lucid is expecting to end the year with $97 million in revenues and a gross profit of $-155 million. Leadership is also expecting an EBITDA of $-1.389 billion and a free cash flow of $-2.312 billion.

The big money is quite involved as well, with 52.41% of $CCIV being owned by institutions. Top holders include Karpus Investment Management, Millennium Management, and Alberta Investment Management.

On a technical basis, Churchill Capital IV could be presenting an opportunity. According to the six-month charts the MACD is moving with downside momentum within a tight range around -1.825.

The six-month charts are also indicating an RSI of 39.55 and CCI of -101.1523, both of which are on the low end.

In short, Lucid Motors is a promising electric vehicle play with a solid management team and strategy in place but still represents a significant risk as the scaling of manufacturing will be a difficult process.


Disclaimer: This is not direct financial advice, simply an opinion based on independent research.

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