When Churchill Capital (NYSE:CCIV) announced the much-awaited Lucid Motors deal, the SPAC imploded immediately. Investors who thought they bought a smart hot electric vehicle play got played.
CCIV sold $2.5 billion worth of shares to finance the deal at $15.00. This benefited only a small group of investors. Once the deal is done, anyone retail investor buying CCIV stock will not benefit. Why not?
CCIV’s transaction gives Lucid a $4.4-billion net cash position. It will get $2.1 billion from CCIV and $2.5 billion from a PIPE or committed private investment on public equity. Lucid and CCIV priced the PIPE at $15 a share. This is a 50% premium to CCIV’s net asset value. Churchill used the hype in EVs last month to get as much as they can.
Add the “sell-on-the-news” catalyst and CCIV is leading the decline for all other SPACs.
Rawlinson, a former Tesla engineer, is using CCIV’s hunger for a deal to get the best terms. Early Lucid investors will get rich as will insiders. Anyone buying CCIV later will come out behind.
Your Takeaway
CCIV’s $60 peak is very high compared to the $15 deal. Tread carefully and avoid most SPACs.