What is the long-term outcome of Lucid and CCIV stocks merging?
Asked 4 years ago
Hi, I've got a few questions rattling in my head: How does the merging of stocks impact investors that already hold the stock? Do they lose, or do they gain? Why do the stocks merge in the first place? If I was holding CCIV, what would be the best move for me to make in this instance? Thanks in advance for all your expertise!
Andrew Moran
Tuesday, August 03, 2021
1) At first, the stock price of the newly-merged company will generally surpass the value of both underlying businesses from before the merger. Also, on a long-term basis, shareholders will see superb earnings per share and dividends.
Ultimately, there is more upside than downside so you will inevitably gain from a merger.
2) There are multiple reasons why stocks would merge. The primary explanation is that both sides see an opportunity to increase shareholder value by generating new business or increasing market share.
Some other justifications could be for tax purposes, a desire for the target's assets, and greater financial capacity.
3) In terms of Churchill Capital IV and Lucid Motors, this could be a sublime long-term investment based on analysts' reviews. But it is all up in the air based on the electric vehicle that is in development. Since it has yet to be released, there is plenty of uncertainty regarding the stock's potential. But, with the merged company (Lucid Group), prices have been slumping, so now might be a good entry point for new investors.
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