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 continued to fall for the second day in a row on Wednesday after announcing a deal Monday night to make the Lucid electric vehicle firm public through a reverse merger.
Shares fell as much as 19.6% during trading at noon, to $ 28.32, which was a tumultuous week for the special-purpose acquisition company, also known as SPAC, of the well-known investor Michael Klein. Shares were down 38.6% on Tuesday. Consecutive falls 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 attributed the fall in share prices to media reports that the company’s expected valuation ranged from $ 12 billion to $ 15 billion, leading to a misunderstanding. initial agreement announced by investors.
“I think the market still doesn’t have to properly understand what’s going on,” he told CNBC in an interview with Zoom. “Because for me, what was announced overnight was fantastically positive compared to everything that had been reported before.”
The Wall Street Journal highlighted the confusion in a Wednesday article with the first graph in history that said, “Is the electric vehicle company Lucid Motors worth $ 11.5 billion, $ 24 billion or $ 57 billion?”
The equity value of the deal is $ 16.3 billion and would pay $ 11.5 billion to Lucid’s existing shareholders. He valued Lucid with an initial proforma valuation of $ 24 billion. Pending shareholder approval, it would generate about $ 4.4 billion in cash for Lucid’s expansion plans, including its current plant in Arizona.
The agreement between Lucid and Churchill based in Newark, California, and the Churchill is the most important of a number of these ties involving electric vehicle companies and a SPAC. Previous SPAC deals with emerging companies such as Nikola, Fisker and Lordstown Motors earned pro-forma valuations of less than $ 4 billion.
A SPAC is a blank check company, formed as an alternative to a IPO, because it raises funds to buy something but has no operations of its own. They are essentially asset-free companies, apart from cash, and are listed 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” marker after closing the deal in the second quarter of this year.