If you want to see FinTwit break, then have a SPAC announce a purchase of Rivian or Lucid. These are the crown jewels of the electric vehicle industry that still exist in the private markets. I'd put lesser known Chanje third on the list.
Rivian feels like a pipe dream. I often dismiss the rumors tied to the company coming public via a SPAC. It's already one of the best funded EV names in the industry and it just added another $2.65 billion to its cash coffers this week. The names involved include Fidelity, D1, and Amazon (AMZN) (again). Remember, this one already had support from Ford (F) and Amazon. With two trucks hitting the market later this year the last thing I believe management wants is the distraction of going public via a SPAC.
What may matter more is the possibility of an electric delivery van. The commercial markets are, in my view, the sweet spot for EVs, not the retail/consumer side of the equation. This could impact names like Workhorse (WKHS) , Nikola (NKLA) , and Canoo (GOEV) , among others.
Somewhat in the Rivian noise is the fact Ford has a respectable size position. The company invested $500 million in Rivian at a $4.5 billion pre-money valuation. That represents a 10% ownership, however, there's been dilution since that time. My guess is the ownership sits around 7% to 8%. Based on this most recent Rivian raise, the company is valued around $27.6 billion. That means Ford stake likely sits around $1.8 to $2.2 billion.
Some will look at Ford's recent run and say that's priced into the stock, but Ford is merely back to its July 2019 price. General Motors (GM) has significantly outperformed Ford over the past year, and most shorter time frames within that. While I continue to think both are worth owning, Ford is due for a some catch-up here.
In terms of Lucid, however it gets listed, the stock will jump. The current rumor mill points to Churchill Capital Corp IV (CCIV) . Given the aggressive action we've already seen on the SPAC, now trading around an 80% premium to its IPO, we already know investors and speculators are hungry for this one. By this one, I mean Lucid. Seeing that action, it would be silly for Lucid not to consider a SPAC if it finds itself with a need or want for cash. Lining up PIPE investors would be like shooting fish in a barrel. Lining up retail to buy on the market would be like shooting fish in a glass of water.
Lucid is considered a front-runner to challenge Tesla (TSLA) . While other EVs are commanding high multiples, I would anticipate Lucid quickly challenging NIO (NIO) for number two on the list of EV names. The cult would come fast and furious. As long as Tesla doesn't break, Lucid has a clear path to a valuation in the $25 billion to $50 billion range within the first 12 months.
I'd love to say this is based on some fundamental metric, but I'm drawing more from names like Tesla, NIO, Li Auto (LI) , Xpeng (XPEV) , and Rivian, which are what the market is going to compare Lucid to more than Fisker (FSR) , or Mullen/Net Element (NETE) .
If Lucid doesn't get public, it's going to break a lot of hearts. If it does, expect it to soar. And if you see Chanje linked to a SPAC, it's a rumor I'll probably buy quickly if the SPAC is trading under $12.50 when I see it.
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