Today at 10 a.m. Pacific, Lucid Motors hosts a special livestream on their YouTube channel.
In a cryptic tweet last Friday, the company teased: “Love at first touch, listen, connection, and sight. The countdown begins now for the Lucid User Experience reveal on May 26.”
A favorite among retail traders, speculation immediately began about Lucid’s plan for the big reveal.
The stock popped as much as 6% yesterday, indicating cautious optimism about the potential of the reveal.
But should you trade this event? And if so, how?
Let’s take a brief look at the bumpy ride this SPAC deal has taken so far, and decide whether CCIV stock is in for a potentially major catalyst later today.
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EV SPAC Goes on a Wild Ride
Lucid Motors is an electric vehicle company based out of Newark, CA that aims to corner the luxury end of the EV marketplace.
If Tesla and Maybach had a baby, it would be the Lucid Air — the company’s very first production vehicle design, set to release in the second half of 2021.
Lucid went public via SPAC Churchill Capital Corp IV earlier this year to much fanfare.
The rumors about the merger began swirling in early January when CCIV stock was regularly trading right around $10.
By the end of the month it was trading for $25, but that was only the beginning. Retail traders had gotten wind of this now, and there was no stopping the momentum…
CCIV then proceeded to make a truly parabolic move, violently ramping in price with ascending volume, ultimately reaching a high of $58.05 on February 18.
The peak share price uncoincidentally coincided with the official announcement of the merger on February 22.
It was a textbook “sell the news” event, and by the time one week had passed, CCIV had lost more than half the value of its highs, trading for just $27.82 on February 25.
Since then, CCIV has been helplessly trapped in a slogging downtrend, hitting near-term lows of $17.25 last week.
But why did everyone sell the news?
A bearish turn in the market for pre-profit growth stocks, coupled with negative macroeconomic conditions, have led to concerns amongst traders around production capability, and thus a decline in the share price.
The global chip shortage has severely affected the company’s 2021 production outlooks, according to CEO Peter Rawlinson.
“Covid has wreaked havoc with our process,” Rawlinson told Bloomberg.
So what exactly is happening? And why are semiconductors so important to electric vehicles?
A Story of Semiconductors
Semiconductors are elemental to nearly every electronic device you use daily.
They are also indescribably small — just five-hundredths of the size of a human hair.
To manufacture them, lab workers need a perfectly clean room — free of any dust or other airborne particles — as one speck can critically damage the delicate hardware components.
A well-managed semiconductor factory looks more like an emergency operating room than an electronics plant, and it was this way even before the pandemic.
Every technician is adorned head-to-toe in scrubs, and sterility protocols rival that of the finest hospitals in the world.
But recent surges of COVID-19 in Taiwan, the global epicenter of semiconductor production, have threatened a variety of industries that rely on the country’s chip output to build their products…
… and the electric vehicle sector is one of them.
This is because electric vehicles are, literally, computers on wheels.
The brain that drives the vehicle’s self-driving decisions — and the eyes with which the vehicle takes in its surroundings — are both functions of an elaborate and ultra-powerful internal computer system.
Without semiconductors, manufacturers can’t build the internal computers — and thus can’t produce the cars.
While this is concerning, it can’t last forever. Traders with a medium or long-term time horizon are already looking out to the day when EV production can resume at full capacity.
As impressive as the nuts and bolts of the vehicles are sure to be, it’s the utterly gorgeous design of the Lucid Air that has traders and customers gawking in tandem.
A translucent glass roof with full projection capabilities, unparalleled creature comforts, and an estimated 500-mile maximum per-charge range have followers of Lucid very excited.
Today, market participants expect to get their most detailed look yet into the vehicle itself. If the reveal is as impressive as some expect it to be, it could become a major catalyst for CCIV stock moving higher in the near term.
But traders should remember that recent headline-grabbing events for the company have sparked massive selloffs in the stock.
Remember this and proceed with caution.
So, will today be any different? Can Lucid finally knock the socks off of traders with a stunning livestream? Or will it be Tesla’s Battery Day all over again?
You’ll have to tune in at 10 a.m. Pacific to find out.
And if you plan to trade CCIV around the event — be careful, be aware of recent history, and stay disciplined.
Cover image editorial credit: T. Schneider/Shutterstock.com