#E-car maker Lucid has strong Nasdaq debut after merger with SPAC

Shares of Lucid Group rose as much as 19 percent in their Nasdaq debut on Monday after the electric-vehicle maker completed its merger with a blank-check company backed by Wall Street dealmaker Michael Klein.

Lucid, which is run by an ex-Tesla engineer, had agreed to go public in February through a merger with Churchill Capital Corp. The deal gave the combined company a pro-forma equity value of $24 billion.

Lucid’s listing is a huge dividend for Saudi Arabia’s Public Investment Fund, which had invested more than $1 billion in the company in 2018 for a substantial stake.

PIF, BlackRock and others in February invested another $2.5 billion in Lucid as part of the merger. Sovereign wealth fund PIF, the engine of Crown Prince Mohammad bin Salman’s economic transformation plans for Saudi Arabia, manages a portfolio worth $400 billion.

Lucid shares were last up about 6 percent on Monday, having opened at $24.25.

Despite the strong investor interest, some analysts raised questions about the steep valuation fetched by a company that virtually had no revenue.

“Buyers expect they [Lucid] will fully ramp up over the next few years. But that represents a major execution risk,” said Matthew Kennedy, senior strategist at Renaissance Capital, a provider of institutional research and IPO ETFs.

Lucid brings a lot in terms of performance, but investors should “realize it is risky to buy a company with no revenue and such a large market capitalization,” he added.

Newark, Calif.-based Lucid is the latest beneficiary of increasing demand for electric vehicles, fueled by tougher emission regulations globally, the Biden administration’s green wave push and the rise of Tesla.

Several other prominent players in the sector have also merged with special purpose acquisition companies to go public. While firms such as Fisker have recorded a rise in their shares, others including Nikola have declined.