The Lucid Air will start below $80,000 and climb to $169,000 for the Air Dream Edition.
Lucid Motors photo
The worst kept secret on Wall Street is finally official. After weeks of speculation, hot electric vehicle start up Lucid Motors has agreed to become a publicly traded company by merging with Churchill Capital Corp IV.
Now Churchill Capital (ticker: CCIV) stock is crashing in premarket trading, down almost 40%. Investors believe Lucid deserves a sky-high valuation, just not an eye-popping one.
The merger values Lucid at about $12 billion, but that figure is based on the cash coming in from special purpose acquisition company Churchill. The valuation of Lucid based on Churchill’s stock price Monday is $92 billion based on the 1.6 billion shares that will be outstanding after the merger closes.
That’s enough to make Lucid—a company yet to sell a car—the fifth most valuable car maker on the planet by market capitalization, worth more than General Motors (GM), NIO (NIO) and BMW (BMW.Germany), among others.
Higher-end versions of the luxury Lucid Air are due at the end of 2021 with lower-priced versions hitting the market in 2022. Lucid is taking a Tesla (TSLA) approach to its business, starting with more expensive models and migrating down from there.
Investors, however, are thinking twice about the valuation. Churchill shares are down about 38% in premarket trading Tuesday. That still values Lucid at about $57 billion, more than 10 times the market capitalization of EV start-up Fisker (FSR).
Lucid projects about $14 billion in 2025 sales. Fisker, for comparison, projects about $13 billion in 2025 sales. Lucid projects a big jump to $23 billion in 2026. Fisker’s projections don’t go out that far.
The near-$60 billion valuation is still more than Ford Motor (F), putting Lucid in the top 10 most valuable auto maker club. Investors are excited, in part, by Lucid’s pedigree. Lucid CEO Peter Rawlinson is Tesla’s former vice president of engineering and chief engineer for the Model S.
Whether that is enough to maintain a massive valuation, time will tell.
Overhyped expectations were always a risk for investors buying into Churchill stock on rumors of a Lucid deal. There was no way to know the premerger valuation or the shares outstanding before the deal was announced.
For a little while, at least, investors will have to deal with the consequences of that bet.
Tuesday looks like another tough day for markets. S&P 500 futures are off 0.7%. Dow Jones Industrial Average Futures are down 0.3%. Futures on the tech-heavy Nasdaq Composite have fallen 1.7%.
Write to Al Root at [email protected]
