SPACS: When Investor Expectations Exceed Reality

By Dudley Pierce Baker
Twitter – https://twitter/stockwarrants and https://twitter/SPACwarrants

The last few days of trading in the SPACS have left investors scratching their heads, what happened?

In our opinion, the story of Churchill Capital (CCIV) (Michael Klein) and the Lucid Motors merger was greatly over anticipated and promoted, not by the companies, but in investor chat rooms and on Twitter which sent the shares and warrants up to unrealistic heights.

This is a great story and there is little doubt that when the merger is completed in the second quarter of 2021 that Lucid Motors will be a winner and we believe a big winner with the share and warrant prices exceeding the recent highs of $64.86 and $43.98 respectively. However, the last few days saw those shares and warrants plummet down to $26.71 and $11.75 before rebounding slightly on Thursday.

Investor disappointment drove many to sell on the news of the merger on Monday evening and it has continued. This was the classic, ‘sell on the news’. Investor expectation was just too high after weeks of rumor after rumor that a definitive agreement was coming.

We believe this investor disappointment was responsible for casting a short-term cloud over all the SPACS for the last 3 days and should be lifting soon. Some of the stock warrants trading on the SPACS have dropped to what we believe is greatly overdone levels. A few of the warrants seemed to be in a freefall. These are the times that separate the men from the boys and I for one was buying on this dip.

A relatively common ideology within CSW between my son and I comes from this quote:

“Buy when there is blood in the streets, even when that blood is your own”

Our buying is controlled and we never use leverage or margin and have a firm belief in what we are buying will go up ,at a minimum, of 100% to 200%, possibly, much more and within 8 weeks.

For those that follow our new service, SPAC Warrant Index, the Churchill Capital Acquisition Corporation warrants were in our ‘basket’ in the $1.30 range for weeks before exploding to over $40. While we did not know who the merger target would be, we knew it would be a big deal because Churchill had raised $1.8 Billion in their IPO and we wanted a piece of this pie in the $1.30 range and were greatly rewarded as were many of our subscribers.

Our SPAC Value Index (basket) is a proprietary formula ranking the shares and warrants and assisting in filtering our investments into the most likely next big winners out of HUNDREDS of SPACs now trading.

We strive (and are achieving) approximate gains of over 100% in 8 weeks, sometimes less, and are receiving great subscriber feedback as to their personal stories. Of course, gains are never guaranteed and it is important for us and our subscribers to buy at the lowest prices possible before the SPAC announces a merger, just like in the example of Churchill Capital warrants in the $1.30 range.

We believe there will be another leg up in the share and warrant prices as the merger moves toward completion, after that, Lucid Motors will likely fly high reaching new highs for all investors, but for now, patience and caution is necessary.

The Churchill Capital // Lucid Motor story while a great story producing great gains for those that exited near the recent highs, is only one of many SPAC stories with great gains.

A few examples of previous Stock Warrant returns:
Virgin Galactic – SPCE.WS – from$1.37 to $28.20 – 1,958% Nov – Feb 2020
Draft Kings – DKNGW – from $0.80 to $33.40 – 4,075% – Dec – June 2020
Nikoli Motors – NKLAW – from $0.43 to $41.00 – 9,435% – Mar – June 2020
Opes Acq. – OPESW – from $0.015 to $5.75 – 38,233% – Mar – June 2020

We invite you to visit our homepage for more details and a description of our various services.

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