Should you buy CCIV stock?

Shares of Churchill Capital Corp. IV (NYSE: CCIV) have soared 250% since January 11th on widespread WSB buying.

Fundamental analysis: Lucid merger eyed

According to media reports, the special purpose acquisition company (SPAC) Churchill Capital is looking to strike a deal to take EV maker Lucid Motors Inc. public.

This could cause some investors to sustain heavy losses in case the reverse merger deal with Lucid Motors gets dropped. Even if the deal is completed, it sets the bar pretty high for when the company makes the public debut.

The price swing came after the FT reported that Lucid is looking to build a production plant in Saudi Arabia, its second factory after building the one in Arizona. This led investors and analysts to believe that Lucid was potentially delaying its plans to go public due to the costliness of the project.

The carmaker’s investors and officials, the Saudi fund as well as the SPAC’s managers are set to make a big profit if the deal gets completed. Andrew Liveris, chairman of Lucid Motors, also serves as an operating partner at the SPAC Churchill Capital.

Technical analysis: A wild ride

Shares of Churchill closed at $32.14 on Tuesday, 27.29% more than the day before. It was on this day that the price action printed an all-time high above the $35 mark. Overall, shares gained about 250% since the start of merger talks last month. 

However, a recent report in the Wall Street Journal said that a Lucid Motors SPAC merger announcement is not “imminent,” causing shares to drop over 8%. A pullback to $27 was seen as an opportunity to buy the stock, which then facilitated a quick rebound to levels above the $30 handle. 

Summary

Churchill Capital Corp. IV is reportedly in talks to take the Newark-based electric carmaker Lucid Motors public. Shares soared on the news that the deal is close to completion before another round of media reports dismissed these rumours. All in all, it’s advised to stay on the sidelines until the dust settles.