Elon, are you listening? Because Lucid Motors, currently known as Churchill Capital Corp IV (NYSE:CCIV), just opened fire. Lucid’s CEO Peter Rawlinson delivered a finely honed message during yesterday’s investor call: the EV newcomer is about to challenge Tesla’s (NASDAQ:TSLA) dominance in electric vehicles. And, you remember that exorbitantly rich valuation for CCIV stock I’ve been complaining about? Lucid says it has earned it — because its technology is superior.

Quite the opening salvo. And Rawlinson delivered it just a week before Lucid’s shareholder vote (July 22) and NYSE debut as LCID (July 23).

With the EV maker and widely heralded “Tesla killer” expected to wield a $42 billion market cap, yesterday’s call was the equivalent of court side seats to the hottest pre-IPO roadshow going on right now. Since the announcement, CCIV shares have reversed their downward trend.

In fact, CCIV stock is up 3% this week, hovering at around $26. “LucidNation” has been buzzing on social media boards with “????????????????????????????????????????” and $100 price target predictions. That positive momentum is also highly correlated to the volume of beer emoji emails from my loyal readers: 

Source: Joanna Makris’ email 

Kidding aside, whether you’re a bull or bear on Lucid Motors stock, I think we can agree on this one truth. Rawlinson may have thrown expert shade, but Lucid didn’t really bring investors the tea yesterday. If we’re being completely real here, we were all secretly hoping that Rawlinson would give us a confirmed delivery date on the Lucid Air.

He didn’t. 

But does it even matter? It does. Because, right now, Lucid’s ability to ramp to full commercial volume production and meet its production and delivery estimates is the biggest short-term risk for the stock. And we can be sure that at Lucid’s implied $42 billion valuation, there are no mistakes priced into CCIV stock.

Historical footnote: It’s worth noting that “production hell” almost killed both Tesla and Nio (NYSE:NIO). Just take one of my all-time favorite Elon tweets for reference: “Am considering taking Tesla Private at $420. Funding secured.”

Lucid says it deserves a Tesla multiple because its technology is superior. Rawlinson calls this a “two horse race.” But, dear reader: How many Lucid Airs have you actually seen in the wild? Anyone see the hubris here? 

Lucid certainly has the guts. But LCID stock hasn’t (yet) earned the glory.

That’s not Lucid’s fault: It’s ours, as momentum-driven retail investors. Lucid made the prototypes, but the market made CCIV stock the Tesla killer. Is the stock worthy of the title just yet? Here’s a closer look.

CCIV Stock: Eyes on the Prize  

While my top pick in the EV space remains Tesla, I’ve been waiting for an appropriate pullback on CCIV stock before getting more constructive on the name. Here’s my CCIV thesis in a nutshell: 

Pros: 

• It’s a new potential EV disruptor in a $5 trillion global automotive market
• It has potentially superior battery technology versus Tesla (longer range and faster miles-per-minute charging rates) 
• It’s targeting the “luxury” EV space, rather than the mainstream EV industry (less competition) 

Cons: 

• It has massive inherent risks in achieving volume commercial production
• Its implied valuation defies all fundamental analysis and historical precedent 
• There’s still plenty of competition from larger established EV players and traditional automakers 

Bottom line on the investor update: We could see some momentum-based “sell the news” action, but long-term investors are likely to come away neutral. Although tech geeks like me will relish in Rawlinson’s mellifluous British accent and languorous attention to detail, the presentation didn’t deliver any incremental information. (How could it?)

With that in mind, here’s an overview of the most important details from the call. 

What’s Changed: Production Estimates 

First, the good news. As of June 21, Lucid has completed production builds and has begun production of quality validation builds of the Lucid Air. Total (paid) reservations for the Air top 10,000. Lucid Motors, now 2,300 employees strong, is on track to deliver vehicles to customers in the second half of this year. 

Lucid’s production targets remained largely intact: 

• Lucid Gravity, the company’s luxury SUV, is expected to launch in the second half of 2023
• 2026 production target calls for 251,000 vehicles annually
• Lucid expects to reach an annual run rate of more than 500,000 units over the next nine years. It also expects, a market share of 4% of the EV market.

Not surprisingly, Lucid will have to bump up CAPEX in order to achieve its manufacturing goal of 53,000 Lucid Air vehicles per year by 2023. The company is shifting $350 million in capital expenditures from future periods into 2021-2023 and expanding overall CAPEX by 6-7% during 2021-2026. The increase consists of an incremental 2.7 million square feet of additional manufacturing capacity at its Arizona factory. At its current burn rate, Lucid is fully funded through the end of 2022.

Now for the not-so-good news. Rawlinson noted that Lucid Air is currently undergoing testing and validation. The company is on track to start deliveries in H2 2021. But a launch date wasn’t announced — likely a modest disappointment for the stock.

Second, while the company’s published production forecast targets 20,000 vehicles by 2022, management focused its prepared remarks on outer year numbers. Coupled with no announced start date, the opacity here suggests management’s lack of confidence in the 20,000 estimate. Attaining volume production and near-term production and delivery estimates is the primary near-term risk on CCIV stock. 

Energy Storage Business: Could Be Awesome, But Not Now 

If you haven’t heard this about Lucid — it’s not just an EV manufacturer. Much like its arch nemesis Tesla, the company’s Energy Storage business makes home batteries (similar to Tesla’s Powerwall) and utility-scale devices. 

In the long run, extending into energy storage makes complete sense and expands Lucid’s addressable market. But, with the EV market sustained by over 30% growth over the next decade, it seems early to be talking about secondary markets right now. Still, energy-storage systems leverage the same technology used in Lucid’s cars, albeit with lower-performance cells, making them well-suited for “second-life” purposes. EV batteries typically retain around 70% of their charging capacity once they’re removed from the vehicles themselves, which means they potentially have another decade of useful life.

Not surprisingly, details are scant about the extent of its investment here, in terms of people and capital. For now, Lucid has constructed a prototype of a 300-kilowatt hour stationary battery storage system at its engineering lab which will store power generated from solar panels on the facility’s roof and provide electricity during peak hours.

What’s Changed: Valuation 

When it comes to any sort of valuation conversation on CCIV/LCID, things tend to be pretty binary. Either it matters, or it doesn’t. Coming from the “it matters” camp, I think it’s worth mentioning that Lucid trades at an implied market capitalization of $42 billion. Assuming $5.5 billion in 2023 sales (derived from the company’s production volume and revenue forecast in the slide presentation), that’s an implied valuation of 8.4x 2023 sales. 

There’s no denying it — Lucid’s valuation is rich. I’ve shared my valuations concerns in the past. 

Since I first initiated my Buy Tesla/Sell CCIV trade, as part of my Stocks to Buy and Sell Series, CCIV shares have appreciated 3% in the past month, versus a 13% gain for TSLA stock over the same period. 

The Bottom Line on CCIV Stock

No one expects Tesla to dominate the EV market forever. New entrants to the EV industry (as well as established old world automakers) will begin to innovate and gain more meaningful share. After all, there’s a $5 trillion global automobile market at stake. 

Lucid’s got guts: The company may be well-positioned to take the No. 2 EV maker spot. But for now, I continue to view CCIV stock as overvalued, particularly given the near-term risks associated with meeting the company’s production estimates. If the recent stock action has shown us anything, it’s that CCIV shareholders, particularly those that missed the boat on Tesla, desperately want to get in on the ground floor at the “next Tesla.”

In the short term, expect momentum investors to sell on the news. As Lucid enters the manufacturing phase, success here will dictate whether the company has what it takes to earn the glory. 

Your comments and feedback are always welcome. Let’s continue the discussion. Email me at jmakris@investorplace.com.

On the date of publication, Joanna Makris did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joanna Makris is a Market Analyst at InvestorPlace.com. A strategic thinker and fundamental public equity investor, Joanna leverages over 20 years of experience on Wall Street covering various segments of the Technology, Media, and Telecom sectors at several global investment banks, including Mizuho Securities and Canaccord Genuity.

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