The increased government intervention through attractive financial incentives for EV purchases and strict climate change policies, combined with technological advances observed in recent years, have collectively accelerated global EV sales. Our outlook on the company remains unchanged – we have high conviction that the company is poised for long-term growth if it can maintain an effective business model and steadily grow their global brand reception through continuous innovations to their technology. In our recent coverage of Lucid, we have assigned the company a buy signal. Lucid also has hinted at the upcoming IPO through social media on May 18, sending CCIV’s share price up by almost 6% as investors wait patiently for the merger to close with optimism.
The merger is expected to close some time in the second quarter, which is slated to end in a little under three weeks. The completion of the IPO will result in proceeds of $4.4 billion to Lucid, which will be used toward bringing their flagship sedan – the Lucid Air – to market, and broadening their EV lineup. The PIPE offer is priced at $15 per share and is expected to result in an IPO equity value of approximately $24 billion, which implies 1.6 billion shares outstanding post-merger. The EV maker announced in February that the company has entered into a definitive merger agreement with Churchill Capital Corp IV (NYSE: CCIV) to go public. Among the slew of recent EV IPOs through SPAC mergers is Lucid Motors (“Lucid”). Dozens of pre-revenue electric vehicle (“EV”) startups looking to take a ride on the tailwinds for electrification also have turned to the SPAC trend as they scramble for capital to fund their R&D needs. SPACs have become an attractive method to take a company public in the past year, especially for startups looking to gain access to the public markets due to the shortened completion timeline, IPO price certainty, and assistance from an experienced management team throughout the process when compared to a traditional IPO. With the Lucid Air commencing deliveries later this year, and strong customer traction proven through oversubscription of the top-tier Dream Edition, we believe Lucid Motors has the financial strength to trade at a similar multiple in the long run and beat the $40 billion market cap with ease. Similar pre-revenue EV startups in the industry are currently trading at an average P/S ratio of 16.59x.However, we believe any post-merger slump in share price will only be transitory as the company is well-positioned for long-term growth in the EV sector. CCIV's investors have started to question whether the $40 billion market cap post-merger, which is expected to occur some time in the second quarter, is sustainable for the EV startup.The drastic increase in number of shares post-merger will send the company's market cap from $6.9 billion to more than $40 billion based on the current $25-$26 share price.The PIPE offer is priced at $15 per share with a total IPO equity value of approximately $24 billion, implying 1.6 billion shares outstanding post merger.Lucid Motors announced in February that the company has entered into a definitive merger agreement with Churchill Capital Corp IV to take the company public via a SPAC IPO.
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