CCIV - Is Churchill Capital Corp. A Buy? Yes But Watch Out For The Post-Merger Turbulence

• 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.
• 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.
• 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.
• 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. 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.
• Similar pre-revenue EV startups in the industry are currently trading at an average P/S ratio of 16.59x. 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.

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