I Bought Into the Lucid Motors Hype Early. Here's What I'm Excited About -- and What I'm Afraid Of. | The Motley Fool
"EV SPACs are all the rage currently, and they're arguably approaching bubble territory. Churchill Capital's deal with Lucid values the EV start-up at $12 billion, according to Reuters. But
SPAC mergers are also done at $10 per share. With shares trading around $50, that would imply a
market cap of around $60 billion -- more than Ford -- for a company that has yet to deliver a single car to consumers.
These are all broad estimates based on media reports and investors won't know more until the deal is officially announced and the merger structure is disclosed (if it goes through), but it's fair to say that a SPAC soaring to over $50 before confirming a target is a bit much. Additionally,
investors have no insight into Lucid's detailed financials, so things like operating expenses, cash burn rates, or the balance sheet remain a complete mystery. Obviously, that's also a risk for anyone considering investing in Churchill Capital IV before an agreement is finalized.
Considering the price action over the past month, there are irrefutable concerns around Churchill Capital IV's current valuation. That will create
gut-wrenching volatility and the potential for enormous downside risks. I wouldn't be remotely surprised if this turned out to be one of those
"buy the rumor, sell the news" situations, but I'm in for the long haul, for better or for worse."