Lucid Motors Stock: When Can You Invest in This Electric Vehicle IPO
Updated March 3
On February 22nd, it was just announced that Lucid Motors has entered into a definitive agreement to merge with Churchill Capital IV (CCIV) at a pro forma equity value of $24 billion. The company will receive $4.4 billion as part of the deal which is expected to close in the second quarter of 2021.
Since the conclusion of this merger announcement shares of CCIV have traded down sharply. The company now has an implied market capitalization of $38 billion and shares are nearly 60% off their highs reached in the hours before Lucid’s definitive agreement with Churchill Capital was announced.
If you’re looking for explanations why CCIV’s shares have fallen so much since the merger announcement with Lucid, keep in mind the following:
- When you’re buying shares of a blank check special purpose acquisition company (SPAC) like Churchill Capital IV, even when rumors of a merger are announced, valuation details are still unknown.
- In the case of Lucid, final funding for the company came in a merger agreement with Churchill but also a Private Investment in Public Equity (PIPE) which raised the pro forma equity value of Lucid to $24 billion. (Prior reports had indicated $12 billion).
- In the end, with it known that Lucid Motors would have 1.6 billion shares outstanding after its merger with CCIV completed, investors were able to fully value the company. In early trading, Lucid’s shares fell to a point where its implied market capitalization was $60 billion.
- However, in the weeks since the merger, its shares have continued falling and as of March 3rd, the company is trading for an implied market capitalization of $38 billion. This is likely for two reasons. 1.) A lot of investors were in CCIV hoping for a “pop” after its merger was announced. When that didn’t happen, they sold putting selling pressure on the company. 2.) Electric car stocks, in general, have struggled in recent weeks.
If you’re deciding whether to buy or sell CCIV, we have the full details on Lucid Motors and its impending merger to go public below.
What is Lucid Motors?
Lucid Motors is an electric vehicle company whose designs have turned heads. With a production ramp slated for 2021, the company could quickly become a top challenger to Tesla.
Expected IPO Date:
- As of February 22nd, Lucid has entered into a definitive agreement to merge with Churchill Capital IV. That SPAC trades under ticker symbol CCIV.
- The deal values Lucid Motors at $24 billion and provides $4.4 billion in cash for the company to scale production.
- The company is planning a sedan with a range of 517 miles, which -- for the time being -- would top the range of any of Tesla’s models.
- Lucid plans to begin mass producing its Air luxury sedan in the spring of 2021, which gives it a head start on many other EV rivals.
- Building out vehicle production is a historically difficult problem that almost led Tesla to bankruptcy. Many EV startups will be challenged with the capital needs of scaling production.
- The company faces plenty of competition in the EV space from Tesla and also startups like Rivian in addition to established automakers.
- At an implied $60 billion market capitalization, Lucid would trade at the same market cap as Tesla in March 2020
Lucid Motors News & Analysis
- February 23: Lucid Motors merging with CCIV in a deal valued at $24 billion
- February 17: Why Lucid Motors is moving Churchill Capital stock
- February 17: I bought into the Lucid hype early. Here’s what I’m excited about — and afraid of
- February 5: Why SPAC Churchill Capital IV’s is higher today
Here’s Why Investors Want to See Lucid Motors Go Public in 2021
Electric automakers caught the eye of many investors in 2020 as Tesla’s stock price skyrocketed to new heights. Meanwhile, the largest automakers in the U.S. are pivoting to electric vehicles (EVs) and this shift has many investors looking for the next big electric automaker that could bring huge returns.
That’s why many investors are interested in Lucid Motors, Inc. IPO. However, on February 22nd Lucid announced its preparing to hit the public markets via a merger with a special purpose acquisition vehicle (SPAC) named Churchill Capital IV (NYSE: CCIV) rather than undergroing a traditional IPO process. For all the details on Lucid Motors, read on below!
Bull Case: Why Buy Lucid Motors Stock?
Electric vehicles are clearly the future of automotive transportation. EVs have unmatched power, are better for the environment than internal combustion engine vehicles, and can easily be updated with more features. Also, they’re like, super futuristic, right?
Even century-old automakers like General Motors and Ford are pivoting towards electric vehicles and have pledged tens of billions of dollars to develop electric autos.
Why is this good for Lucid Motors? Research from Deloitte estimates that electric vehicles will account for one-third of all new cars sold globally by 2030. That’s a lot of EVs! And we’re already on the cusp of this transition to electric vehicles. IHS Markit estimates that 130 EV models will be available in the U.S. by 2026.
Considering that Lucid Motors is a luxury electric vehicle maker (no internal combustion engines allowed!) the company stands to benefit as the automotive market drifts towards an EV future.
The company also has a few technological tricks up its sleeve. Lucid Motors claims that its Lucid Air luxury sedan will have a maximum range of 517 miles (higher than any of Tesla’s models) and will have a fast-charging system that can reach 300 miles-worth of charging in just 20 minutes.
Lucid Motors already has a massive vehicle manufacturing plant up and running in Arizona that will begin churning Lucid Airs in the spring of 2021. Lucid Motors will enter the EV market at an inflection point for the industry and its high-end Air model, and subsequent Project Gravity electric SUV, will no doubt tap into increasing EV demand.
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Bear Case: Why Pump the Brakes on Lucid Motors IPO?
Building vehicles is tough. Like AP Calculus tough. It turns out that starting car companies from scratch and building them into automotive powerhouses isn’t exactly easy.
Cars take years to design and develop, even before you begin building them, and then getting the manufacturing process right (and delivering products on time) takes more than a few cool design renderings. Tesla is a prime example of an electric automaker that has succeeded in this space, but even after 18 years of making wildly popular electric vehicles, the company has yet to post an annual profit.
“Sure, but maybe Lucid Motors will be different!” Not likely. Even if Lucid Motors doesn’t have any production hiccups, meets its timeline for model releases, and demand for its vehicles is off the charts, the company will likely still take many years to become profitable.
And then there’s that pesky element of capitalism: Competition. Lucid Motors is entering the EV market as Tesla is already producing more than 500,000 electric vehicles a year, new high-profile electric vehicle companies, like Rivian, are entering the market, and traditional automakers are ramping up their production of EVs.
So while the market for electric cars is about to heat up, the influx of electric vehicles could short circuit (see what I did there?) Lucid Motors’ growth plans.
In short, if you’re expecting Lucid Motors stock to skyrocketed after its IPO just because Tesla’s stock has done well since it went public, remember that buying shares of Lucid Motors comes with zero guarantees that they’ll perform just as well as Tesla’s have over the past few years.
When Can I Buy Lucid Motors’ Stock?
Once Lucid’s agreement with Churchill Capital closes — expected in the second quarter of the year — the two companies will merge and Lucid will officially become a publicly-traded company. However, with a definitive merger agreement signed with Churchill Capital IV, investors who don’t want to wait for this merger to complete can still effectively own Lucid Motors stock simply by owning shares of CCIV.
Prior to this merger agreement, the EV automaker had long made it clear that it intends to go public. Lucid Motors recently told the Los Angeles Times that it “has always been clear about its intent to go public at some point”.
The reason for Lucid Motors joining the public markets is simple: access to capital. The deal will generate nearly $4.4 billion that will go to the company’s balance sheet and provide the funds needed to start producing its Air sedans in higher quantities.
SPACs have become a popular avenue for companies to quickly list their stock on exchanges by merging with so-called blank-check companies. But, they also come with downsides.
For example, while Lucid Motors will raise $4.4 billion in cash from this merger, it will do so at a $24 billion pro forma valuation. Were the company to have gone public via a traditional IPO, its value would have likely been significantly higher, which could have provided an even greater war chest of cash to fight against the wave of EV startups.
Lucid Motors Stock: Who Owns It Now?
Since 2009, Lucid Motors has had four funding rounds. Some of the company’s early investors were the China Environmental Fund, Venrock, Tsing Capital, and Mitsui & Co. But Lucid Motor’s biggest investor is Saudi Arabia’s Public Investment Fund, which invested $1.3 billion in the electric vehicle company in 2018.
That investment reportedly gave Saudi Arabia majority ownership of the company. Lucid Motors’ CEO, Peter Rawlinson, told CNBC recently that Saudi Arabia’s wealth fund investment is a “long-term strategic partnership.”
That partnership became more apparent in January 2021 when Bloomberg reported that Lucid Motors may build an EV factory near Jeddah, Saudi Arabia’s second-largest city. Lucid Motors is based in Newark, California, and only has one EV plant right now, in Arizona.
With Saudi Arabia’s Public Investment Fund owning more than 50% of Lucid Motor, its investor deck includes a notice that it matches the New York Stock Exchange listing standards to qualify as a controlled company.
Lucid Motors’ Graph: Valuation vs. GM, Ford, NIO, Rivian, and Tesla
Based on Lucid Motors’ merger agreement with Churchill Capital, it is valued at $24 billion.
As you can see, at the valuation the company would be valued at less than Nio, General Motors, Ford, and Rivian.
But that doesn’t mean that’s how much the company will be valued when it goes public. While Lucid was valued at $24 billion as part of its reverse merger with Churchill IV, shares of CCIV traded a little north of $37 the morning after its merger agreement (a steep drop from the pre-merger announcement price), which left the company trading for an implied $60 billion.
That might be confusing, so here’s the math. As part of the investor presentation announcing the merger, Lucid noted that CCIV shareholders would own 16.1% of the company. At a price of $37 per share, the total value of CCIV shares is worth around $10 billion. And with 1.6 billion shares outstanding (167 million for PIPE shareholders and 1.175 billion for existing Lucid shareholders), the value for the entirety of Lucid Motors is an implied $60 billion.
That number is significantly higher than its valuation in its merger agreement, which shows the company likely could have raised money at higher valuations through an IPO — albeit with drawbacks such as how long it would take Lucid shares to publicly trade.
At that $60 billion valuation, Lucid was worth more than Ford and slightly less than General Motors, so you can see while its valuation for raising money from a special purpose vehicle was lower than peers, CCIV shares remained quite richly priced.
Additionally, the chart also shows just how lopsided investors have been when it comes to valuing EV automakers compared to traditional automakers. If recent history is any indicator, the value of electric vehicle stocks could continue to outpace traditional automakers, even though EV makers produce far fewer vehicles and aren’t as profitable right now.
Why is CCIV’s Share Price Down After the Merger Announcement?
Now, if you owned CCIV prior to the merger and are seeing its stock down roughly 35% at market open today, I’m sure a single question is on your mind: why is the stock suddenly down 35%… Isn’t a merger agreement GOOD?
Plenty of news stories today will attribute CCIV’s decline to “buy the rumor, sell the news.” That is, as rumors proliferate on up-and-coming stocks, investors often sell once the news event has happened. Perhaps some of that is in action today.
Another side to the story is around the details of this announcement. When companies are discussing SPAC merger agreements, details can be fuzzy and investors are left to rely on snippets leaked to the media. For weeks the reports had been Lucid Motors’ transactional valuation would be somewhere between $12 billion and $15 billion.
However, the final agreement placed a pro forma valuation of $24 billion on the company with a large PIPE (a type of private investment) funding aside CCIV. It could simply be that with the final terms of the deal announced, investors all along had been looking to value Lucid Motors at closer to $60 billion. Under the current terms of this SPAC, Lucid is worth $60 billion at closer to $40 per share than the $57 per share it was trading at prior to the announcement.
The big picture to keep in mind with SPACs: there are often plenty of unknown variables before definitive merger agreements are reached. Small changes can often alter the attractiveness of a deal.
What is Lucid Motors’ Stock Symbol?
As Lucid has entered into a definitive merger with Churchill Capital IV, it effectively trades under the ticker symbol CCIV for the time being.
Most companies that have gone public via SPACs have later changed their tickers to better reflect their own branding. As an example, after Clover merged with Social Capital Hedosophia Holdings Corp. III (IPOC), it began trading under the ticker symbol CLOV.
Lucid has opted to trade under the ticker symbol LCID once its merger with CCIV completes. It’s expected to begin trading under its new ticker symbol on the NYSE in the second quarter of 2021.
14 Top Takeaways from Lucid Motor’s Investor Deck
Along with their announcement Lucid Motors had entered into an agreement to merge with Churchill Capital IV, the company also released an investor presentation to highlight their long-term business goals and the terms of the deal. I’ve combed through this 74-page deck and here are some of my top takeaways:
- 20 million+: That’s the number of real-world miles that have already been driven by Lucid Motors cars.
- 403: The number of patents Lucid has filed to protect its IP.
- 1.4 million: The number of viewers for Lucid’s Air reveal video. Tesla wouldn’t be where it is without some PR magic, so keeping an eye on how the company stays in the headlines is very important.
- 517 miles: Lucid Air Grand Touring’s reported range, which remains above the Model S’ current stated range of 412 miles.
- $69,900: The entry price for the Lucid Air Pure.
- 2023: The date when Lucid hopes to bring its Gravity SUV to market.
- 20 minutes: The time Lucid says it will take to charge its Touring edition for 300 miles of range.
- 32 sensors: The number of sensors Lucid’s cars will ship with. The company says its cars will have Level 2 autonomy (driver supervised steering, acceleration, and braking).
- 900v: The voltage Lucid says will be delivered by its charging partnership with Electrify America. Tesla’s superchargers are reported to be 400v.
- 90,000 units per year: What Lucid believes it can produce once the second phase of its manufacturing plant is complete.
- 4%: The market share of luxury vehicles Lucid hopes to capture by 2030.
- $2.219 billion: Lucid’s projected revenue for 2022
- $22,756: Their projected revenue for 2026. (Just remember, most companies are … optimistic… in this future projections!)
- 1.6 billion: The number of outstanding Lucid shares once their transaction with CCIV closes.
Lucid’s Electric Car Lineup
Within Lucid Motors’ investor deck they revealed further details on their car lineup. The company plans to launch its Lucid Air in 2021, an SUV that’s being designed under “Project Gravity” in 2023, and by 2030 have a full lineup that includes additional sedans, SUVs, and other vehicles.
Lucid Air: Pricing and features
Lucid plans to release the Air starting at $69,000.
In total, the company will offer four editions of its Air sedan.
- Lucid Air Pure: Starting at $69,900 with a range projected at >400 miles of range and 480 horsepower.
- Lucid Air Touring: From $87,500 with 620 horsepower and >400 miles of range.
- Lucid Air Grand Touring: 800 horsepower and extended range projected at >500 miles with 800 horsepower. Starting at $131,500.
- Lucid Air Dream Edition: The granddaddy of them all. $161,500 starting price tag for 1,080 horsepower and projected range in excess of 500 miles. Comes with a top speed of 168 mph and a 0-60 of sub-2.5 seconds.
Project Gravity and Other Vehicles
Lucid is staying fairly mum on the details beyond its Air sedan, but has announced an SUV that is being designed under Project Gravity. The company boasts that its miniaturized drivetrain technology will provide ‘category-redefining’ interior space.
Lucid plans a full line-up by 2030. Their investor deck makes references to a planned pickup truck and a planned couple that would compete in the high-end of those markets.
Lucid Motors’ Stock: Should You Buy the IPO?
Lucid Motors won’t begin producing its Lucid Air until Spring 2021 (though potential buyers can pre-order multiple versions of the Lucid Air right now) and, consequently, the company doesn’t have much or any revenue right now.
That means that it’s difficult to determine the company’s value or if it would make a good long-term investment.
Potential investors would be wise to consider three things. First, Lucid Motors is going to produce a paltry amount of vehicles for a while. The company just completed its factory in Arizona at the end of 2020 and says that it will be able to produce 7,000 vehicles — at most — in 2021.
That is… not a lot of vehicles. Tesla just reached 500,000 vehicles in 2020 and that’s a very small amount compared to General Motors, which sold 6.8 million vehicles worldwide in 2020. Lucid Motors says that its Arizona factory could eventually produce 400,000 vehicles.
But that brings us to the second thing investors should consider: automotive production takes time. Lucid Motors will likely hit a few speed bumps during production of its Lucid Air sedan. Each time it does, that will slow down how many vehicles it can produce and sell. This is normal, of course, but when a company is going public and investors are waiting for revenue to show up on the balance sheet it becomes very important.
And the third reason investors should be cautious about Lucid Motors’ IPO is that competition in the electric vehicle market is getting a lot more intense. Tesla will want to defend its territory in the high-end EV market, where Lucid Motors is competing, and EV newcomers like NIO and Rivian could add pressure as well.
And, of course, traditional car makers are working hard to be competitive in this space as well. GM recently pledged $27 billion over the next five years to build electric and autonomous vehicles.
Finally, there’s no telling what kind of demand Lucid Motors will have for its vehicles even when they become widely available. Sure, consumers may want electric cars, but do they want Lucid Motors’ electric cars? We still don’t know.
All of this means that while Lucid Motors could prove to be a good long-term investment, buying the company’s stock when it goes public may be too much of a gamble.
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Frequently Asked Questions
Is Lucid Motors Public?
As of February 22, 2021, Lucid is has entered into a definitive merger agreement with Churchill Capital IV. Investors will be able to effectively invest in Lucid Motors via purchasing CCIV. Once the merger completes in the second quarter it’s likely the company will change its ticker symbol to something more aligned with Lucid Motors.
What is the price of Lucid Stock?
Until the middle of the second quarter, Lucid will effectively trade under the ticker symbol CCIV. Once its merger with Churchill Capital IV completed, it will begin trading under LCID.
Is Lucid better than Tesla?
Lucid is targeting a range of 517 miles on its Air sedan, which would top the range of any currently available Tesla cars. However, as far as the company being a better investment than Tesla is to be determined.
Lucid is currently significantly smaller Tesla, which is attracting a lot of investor attention. However, it has yet to go through the “production hell” of reaching scale on its electric vehicle production.
How do I buy pre-IPO stock of Lucid Motors?
If Lucid Motors completes a merger with a special purpose acquisition company (reportedly Churchill Capital IV), it would have no traditional IPO. Once a merger agreement is struck investors can begin investing directly in Lucid via owning shares of the SPAC.