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RIDE - Lordstown Motors News Story

$10.73 -1.0  -8.5%

Last Trade - 12/04/21

Sector
Consumer Cyclicals
Size
Mid Cap
Market Cap £1.51bn
Enterprise Value £1.05bn
Revenue £n/a
Position in Universe 2184th / 6825

UPDATE 1-Lucid Motors' $62 billion valuation sparks bubble concerns

Tue 23rd February, 2021 6:29pm
* Electric vehicle maker to go public via reverse merger
    * Deal initially valued at $24 billion
    * Analysts fret about potential frothiness among young EV
firms
    * Lucid delays start of production until late 2021

 (Adds comments from investor call)
    By Akanksha Rana and Noor Zainab Hussain
    Feb 23 (Reuters) - Stock market investors valued electric
vehicle maker Lucid Motors at $62 billion on Tuesday after a
deal to merge with blank check firm Churchill Capital IV,
sparking some concerns about the real worth of the company which
has yet to start regular production.  
    In comparison, General Motors Co  GM.N  was worth about
$72.5 billion at mid-day Tuesday, while China's leading electric
car maker Nio Inc  NIO.N  was valued at $72 billion. 
    Shares in Elon Musk's Tesla  TSLA.O , which have surged more
than 10 times in value over the past year to around $900, fell
for a second day in a row on Tuesday, with its mid-day shares at
$674 and its market capitalization at $647 billion.
    Lucid's first electric car, the luxury Air, won't go in
production now until late 2021, later than the spring 2021
launch initially planned, the company said in a filing.
Officials on Tuesday said they do not expect Lucid to be
cash-flow positive until 2025.
    Shares of Churchill Capital IV Corp  CCIV.N  fell more than
40%, a day after it agreed the merger with Lucid. At mid-day,
CCIV shares had recovered slightly to $39.00, down 32%.     
    The Lucid-CCIV deal includes new private investment that
valued the company at $24 billion, just a fraction of Tesla, but
still the biggest ever involving so-called special purpose
acquisition companies (SPACs).  urn:newsml:reuters.com:*:nL4N2KS4YJ
    "We're bringing the world's best technology to the market
this year, here in the U.S. I think the valuation is a
reflection of our technology," Chief Executive Officer Peter
Rawlinson told CNBC on Tuesday when asked whether Lucid's
valuation made him nervous.
    Rawlinson told investors on a call that its Lucid Air Dream
edition is virtually sold out, while former Citigroup banker
Michael Klein, head of Chruchill Capital, said the company has
sufficient funding for its first three models.
    
    TIME FOR A CORRECTION?
    Rawlinson said that the carmaker expects production of a
less expensive, sub-$70,000 version of the luxury sedan in 2022,
followed by a new model code-named Project Gravity in 2023.  
    The recent run-up in valuations of several EV startups,
including Nikola Corp  NKLA.O  and Lordstown Motors  RIDE.O ,
that have yet to produce saleable vehicles or meaningful
revenue, has drawn comparisons to the dotcom bubble of
1999-2000, with analysts and investors expecting a near-term
correction. 
    "The EV sector feels like it’s going through a correction. 
Lucid’s SPAC-IPO probably (is) driving circular negative
reinforcement," said Roth Capital Partners analyst Craig Irwin. 
    "We think Tesla has been valued for teleportation, so the
correction is probably a very healthy thing.  This allows
investors to watch for potential entry points in names they feel
they might have missed," he added. 
    Lucid, run by ex-Tesla engineer Rawlinson, is the latest EV
firm to tap U.S. capital markets, with investors rushing into
the sector as tougher emission norms drive a switch to electric
vehicles. 
    With its roster of deep-pocketed financial backers, it is
one of the strongest of the flock of startups challenging
Tesla's dominance. 
    After Lucid priced its Air sedan, starting at $77,400, Musk
announced a price cut to its flagship Model S sedan. "The
gauntlet has been thrown down!" he tweeted.
    However, Lucid's five-year timeline to get to production of
250,000 vehicles a year is a reminder of the challenges of
scaling up mass production in the auto industry.
    Tesla, founded in 2003, produced about 500,000 electric
vehicles last year.

 (Reporting by Noor Zainab Hussain and Akanksha Rana in
Bengaluru and Paul Lienert in Detroit; editing by Patrick Graham
and Emelia Sithole-Matarise)
 ((paul.lienert@thomsonreuters.com; mobile 313-670-2452))
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