CCIV Stock Price Gained 46% in June – Good Time to Buy CCIV Stock?

Churchill Capital (CCIV) stock gained 9.4% yesterday and overall gained almost 46% in June. Is it a good time to buy CCIV stock before its merger with electric vehicle startup Lucid Motors?

CCIV is a SPAC (special purpose acquisition company) sponsored by Michael Klein. It was rumored to acquire Lucid Motors for weeks before the deal was finally announced. While CCIV stock has surged as high as $65 before the merger, it fell sharply after the merger announcement. It turned out to be the typical case of “buy the rumour and sell the news.” Meanwhile, the CCIV-Lucid Motors merger is the most popular SPAC merger of 2021.

CCIV stock technical analysis

CCIV stock was in a strong downtrend until about May and was hitting lower lows and lower highs. The stock was about to reach $15 which is the price level at which the PIPE (private investment in public equity) was priced. However, the stock has since rebounded and now looks bullish on the charts.

CCIV stock has crossed above the 10-day, 30-day, 50-day, and 100-day SMA (simple moving average) which looks like a bullish technical indicator. However, the stock is looking overbought now with a 14-day RSI (relative strength index) of 69.4. RSI values above 70 indicate overbought positions while RSI values below 30 signal oversold positions.

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CCIV stock is in an uptrend

The momentum in CCIV stock is being driven by the recent uptrend in other electric vehicle shares including NIO and Tesla. Generally, electric vehicle shares have moved in tandem. 2020 was a phenomenal year for green energy and electric vehicle stocks. Tesla and NIO respectively gained 740% and 1,100% last year.

Electric vehicle stocks

The momentum in electric vehicle stocks continued in 2021 after Democrats took control of the Senate. The Biden administration has vowed friendly policies towards the green economy and so far, hasn’t disappointed. Biden re-joined the Paris Climate Deal that Trump had withdrawn from. The administration has also announced the conversion of the federal fleet to zero-emission vehicles and has proposed billions of dollars of investments to scale up the electric vehicle infrastructure.

The administration is also planning to increase the federal tax credit for electric cars which is currently at a maximum of $7,500. Tesla and General Motors are two automakers that don’t qualify for the tax credit after selling more cars than the maximum threshold.

CCIV-Lucid merger date

CCIV has set July 22 as the voting date for the Lucid Motors merger. The merger vote looks like a formality given the fact that CCIV’s stock price is now almost thrice that of the IPO price of $10. After the merger, CCIV would stop trading and the merged entity will trade under the ticker symbol “LCID.”

CCIV stock forecast

Meanwhile, Wall Street analysts have been taking a bullish view of CCIV stock ahead of the merger with Lucid Motors. Lucid Motors would start delivering its first model, the Lucid Air later this year, and the model has received a good response.

“From the outset, we noticed how the low stance of the sedan, the smoothness of the car’s suspension (even over the cobblestone roads of lower Chelsea), and the Air’s iconic glass ceiling combine to create a unique luxury experience. As part of the highway portion of the test ride, our driver provided us with a preview of the power of the sedan’s EV powertrain, which we believe holds its own versus TSLA models,” said Evercore ISI analysts in their note.

Lucid Air

Lucid Air is a premium model which would compete with the likes of Mercedes EQS and Tesla Model S. Tesla has revamped the Model S and is now offering the Plaid version. However, at the last moment, the company canceled plans for the Plaid+ model which would have had a higher range. The model would have been a direct competitor to Lucid Air.

CCIV stock

At the current CCIV stock price, Lucid Motors is valued at a proforma market capitalization of $46 billion. To put that in perspective NIO has a market capitalization of $87 billion while Tesla has a market capitalization of $654 billion. That said, both NIO and Tesla are producing and delivering cars while Lucid is a pre-revenue company and will deliver cars only later this year.

Lucid Motors is led by a former Tesla engineer Peter Rawlinson. Several analysts see the company as the next Tesla given the many similarities between the two companies. Like Tesla, Lucid Motors is planning to target the broader green energy sector and is also building its own cars like Tesla. Most other electric vehicle startups have partnered with third parties for producing their vehicles.

Lucid Air reservations

Lucid Air reservations have crossed 10,000 and according to Rawlinson “These are bona fide reservations with reasonable down payments. Some people even paid more than $ 7,000 down payment.” Looking at Lucid Air, the company looks like a worthy competitor to market leader Tesla.

Rawlinson added “There really isn’t such a thing as a ‘market for EVs.’ There’s a market for cars, and with great EVs like the Lucid Air that we’re launching this year, we’re going to get more penetration into the internal combustion engine market, more EVs taking the place of gasoline burners.” Musk has also mocked gasoline cars several times.

Tesla versus Lucid Motors

Rawlinson sees the electric vehicle industry as a two-horse race. He said, “Ultimately, it’s the technology that’s going to win, and what’s missing here is the recognition that this is a technology race. And right now, there is one runner in that tech race, and it’s Tesla. That’s why Tesla commands that market cap. That’s why it’s in that preeminent position. We have world-class technology, and we aim to make this a two-horse race.”

CCIV stock was trading lower in US premarket price action today as investors seem to be getting apprehensive of the recent rally. While the stock looks overvalued, retail investors have been willing to pay a hefty premium for pure-play electric vehicle stocks.

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