Bloomberg reported that the transaction could be valued at $15B, but even if that's true, we have no idea what that means for the SPAC. It's not guaranteed to happen, and even if it does we know absolutely nothing about the Lucid deal in terms of financials or how the merger is structured. CCIV trades for a huge premium because investors are excited about a Lucid deal why does Andrew think this particular case show how crazy SPACs are right now?"įirst, remember that the Lucid deal is just a rumor. There's lots of buzz that Lucid is a "Tesla-killer " with Tesla (TSLA) currently supporting a ~$800B EV, there's a lot of value to be captured is Lucid is really a Tesla killer.Īt this point, you're probably thinking, "Ok, cool. The market is clearly excited about that merger, perhaps for good reason. And the reason is that CCIV is rumored to be in talks to merge with Lucid Motors. Of course, there's a reason CCIV trades at such a premium. That pales in comparison to CCIV's ~250% premium. Pershing Square's SPAC (PSTH) and two of Chamath's SPACs (IPOD and IPOF) trade at the largest premiums to trust for pre-deal SPACs I know of outside of CCIV each of those trade at ~50% premium to trust.
For example, DKNG completed their deSPACing merger last year and currently trades for ~$60/share.īut it is pretty insane for a SPAC to trade at this large a premium without a deal announced. It doesn't happen all the time, but if a SPAC announces a particularly good deal in a particularly buzzy sector, the stock will generally race. Now, there's nothing completely insane about a SPAC trading for a huge premium to trust. CCIV is currently trading at ~$35/share, so shareholders are valuing it at 3.5x trust. Like most SPACs, it has $10/share in trust (cash in the bank shareholders can redeem if they don't like CCIV's deal). However, the stock exemplifies the bubble so well currently that I wanted to risk a little bit of dating and put this post together now.ĬCIV is a pre-deal SPAC. It's entirely possible Churchill announces a merger tomorrow morning, which would make this post slightly stale. Note that I am writing this on Sunday, Feb. So today I wanted to dive a little into Churchill Capital Corp IV (CCIV), because I don't think there's ever been a stock that so clearly exemplifies a bubble and, while some people have discussed how wild it is that CCIV is trading at a premium, I don't think people fully realize just how crazy it is for CCIV in particular to trade at this big a prmium.
It's easy to say, "O that's a speculative bubble," but it can be hard to point to any one company or stock that actually exemplifies the bubble. I think there's clearly a SPAC bubble going on right now, and one of my predictions for 2021 is that the bubble will break towards the back half of the year as the pure number of SPACs outstanding overwhelms the speculative capital available and a couple of SPACs start to fail because they simply can't find public ready companies. I have spent a lot of my time this year looking and thinking about SPACs.
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