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VOLATILITY


Green Rush Continues Undaunted

03/19/21 05:04:05 PM
by Matt Blackman

As February wound down and March began, a lot of air had come out of tech stocks. But the EV IPO train is still rolling down the track

Security:   CCIV
Position:   N/A

As the balloon popped signaling the start of 2021, stocks were glued to their chart ceilings with many techs posting parabolic moves, up multiples from their March 2020 lows. The Standard & Poor's 500 Index had gained more than 70% and Nasdaq Composite Index was up more than 90% by mid-January versus a year before.

But these performances paled compared to clean energy and green tech stocks. For example, Chinese EV maker NIO soared from $2.40 in late March to north of $62 by mid-January, up more than 3000%. Tesla gained more than 1000% and the Solar ETF TAN gained more than 500% over the same period.

And clean tech initial public offerings (IPOs) of special purpose acquisition companies (SPACs) like Churchill Capital Corp (CCIV), which will be merging and EV maker Lucid Motors, continue coming down the tracks to markets near you. A SPAC is a corporation without commercial operations created to raise capital through an IPO to acquire an existing company. Nikola Corp. (see article below) is another vehicle manufacturing SPAC example.

Figure 1. Daily chart of Churchill Capital Corp since it began trading.
Graphic provided by: Freestockcharts.com.
 
The similarities between CCIV and NKLA don't end there — both are pre-product, pre-commercial companies without revenues or profits high on hype and low on organic growth. According to the Lucid Motors website, the company plans to begin production in Q2-2021 of their Lucid Air EV with a projected starting sales price of $70,000.

It is entering an increasingly crowded electric vehicle space with an addition of at least 13 more EV-related companies joining the IPO party in 2021, most of which are SPACs (see article below).

Figure 2. Daily chart of CCIV comparing performance with Tesla (purple), First Trust Clean Edge US ETF(red) and the Solar ETF (blue) since February 11, 2021.
Graphic provided by: Freestockcharts.com.
 
Fundamentally, other than the promise of delivering a nice looking electric car with an advertised range of 406 miles later this year, there isn't much to talk about (see the Churchill/Lucid link below) aside from the fact that the IPO raised $11.75 billion. A closing price of $24 puts the market capitalization at $38 billion according to reports (see article 'Why Churchill Capital Dropped...' below).

Technically, CCIV came roaring out of the gate, initially jumping from $10.03 to hit a high of $63.20 February 22, a gain of more than 500%, before collapsing back to $24.40 on March 5. There is a scheduled announcement regarding the Lucid Air's entertainment system March 17 at the SWSX conference but the news has had little impact on the stock so far.

At this point, especially given the trend back to earth for a number of techs, it's probably best to wait for a new base to form with strong support and the next confirmed buy signal trigger.

Suggested Reading:

Lucid Motors website

Nasdaq IPO Calendar

A look at EV startups going public in 2021

Nicola Corp - Where To Next?

Churchill/Lucid Financial Statements

Why Workhorse Group, Nikola, and Churchill Capital IV Stocks Dropped Friday

Shoals Technologies - The New Solar Kid In Town

Hyliion Holding Corp - Another Low Emissions Truck Manufacturer Starts Trading



Matt Blackman

Matt Blackman is a full-time technical and financial writer and trader. He produces corporate and financial newsletters, and assists clients in getting published in the mainstream media. Matt has earned the Chartered Market Technician (CMT) designation. Follow Matt on Twitter at www.twitter.com/RatioTrade

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