For several weeks, rumors swirled that Churchill Capital IV (NYSE:CCIV) was preparing to merge with Lucid Motors. Lucid, one of the hottest electric vehicle (EV) start-ups, is about to begin delivering its luxury sedan, the Lucid Air, within a few months. At long last, the companies confirmed the deal last night, announcing that Churchill Capital IV and Lucid Motors have entered into a definitive merger agreement. Shares promptly tanked in extended trading.
Just last week, I suggested that I wouldn’t be surprised if this ended up being a “buy the rumor, sell the news” situation. That adage refers to a common phenomenon in the market when an event fails to live up to expectations. Here’s why investors may be disappointed in the deal.
How the deal is structured
Over the weekend, Bloomberg reported that a deal might be imminent, suggesting that the announcement could