Lucid Motors Plunges as Fisker Soars. The EV Market Is Never Boring.

Lucid Motors is merging with a SPAC called Churchill Capital Corp. IV.

Courtesy Lucid Motors

The electric-vehicle market works in mysterious ways. Two startups, with the same $13 to $14 billion in projected 2025 sales, have had a very different ride recently.

Stock in Churchill Capital Corp. IV (ticker: CCIV), the special-purpose acquisition company that is merging with Lucid Motors, has lost almost half of its value over the course of two trading days. And Fisker (FSR), another EV stock trading at a lower valuation, is soaring.

Investors had speculated for weeks that Churchill would merge with Lucid, bidding the price up without knowing the terms of the potential deal. They appear to have underestimated the number of Lucid shares that would be outstanding once the transaction closes.

The news of the merger, and that there will be 1.6 billion shares outstanding when it is completed, was announced on Tuesday. That amount of stock, at Monday’s closing price for Churchill, valued the business at more than $90 billion, or more than General Motors (GM).

The stock fell almost 39% on Tuesday and a further 18.5% on Wednesday. Even at the current lower level, Lucid is worth about $46 billion. That’s still roughly the same market capitalization as Ford Motor (F).

It’s also a bigger valuation than Fisker, which gained almost 40% Wednesday. The valuation gap with Lucid isn’t the primary reason for Fisker’s rise, though. Fisker announced plans to build an electric vehicle with Foxconn, the company that assembles electronics such as iPhones, a hefty step forward for the start-up.

The joint venture has big ambitions. “The collaboration between our firms means that it will only take 24 months to produce the next Fisker vehicle—from research and development to production, reducing half of the traditional time required to bring a new vehicle to market,” said Foxconn Technology Group Chairman, Young-way Liu in the company’s news release.

More efficient car design, development, and production is a big deal. The impact on the industry, however, is difficult to quantify. Investors are probably just happy it means more potential sales for Fisker, sooner. The Fisker Ocean built by Magna International (MGA) is due in 2022. The Foxconn car is due in 2023.

Lucid’s first offering is due to start shipping at the end of 2021.

After a rocky couple of days, other EV stocks are recovering. Tesla (TSLA) stock is up 5.4%. NIO (NIO) shares have gained 4.4%, while XPeng (XPEV) and Li Auto (LI) shares are up 2% and 6% respectively. Lordstown Motors (RIDE) shares have added 6.7%.

The S&P 500 added 1.1% Wednesday. The Dow Jones Industrial Average rose 1.4%.

Write to Al Root at allen.root@dowjones.com

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