Summary List PlacementA group of Churchill Capital Corp. IV retail investors hurt by the stock’s rapid fall are attempting to band together on Reddit to “defend” it from short sellers.
The stock fell sharply in the days following Monday’s announcement that the SPAC would merge with luxury electric-vehicle maker Lucid Motors.
A user going by u/MadMax212121, took to Reddit’s r/CCIV forum on Thursday to discuss what the trader described as “market manipulators” entering the stock.
In a post entitled, “LWSB: Lucid Wall Street Bets, all longs – CCIV heavily shorted by coordinated groups and manipulators. Why can’t we have a LWSB and defend. Are you in?” that garnered nearly 9,000 upvotes, the Redditor said retail traders should “keep buying” CCIV stock until it hits $300 per share.
The post echoed popular “David vs. Goliath” sentiments from past Wall Street Bets discussions arguing traders should join forces to “defend” CCIV from institutional short-sellers and bearish options traders. The post called CCIV a “heavily-shorted” stock.
However, according to data from The Wall Street Journal, short interest in CCIV was just 2.19% on Friday. By comparison, Reddit darling GameStop has short interest of around 30%.
With a lower short interest, it’s unlikely a short squeeze could occur, meaning that a GameStop-style rally in the share price is a long shot. Not only that, but hedge funds also own a considerable portion of CCIV shares.
In fact, the three top hedge fund owners of CCIV — Millennium Management, Karpus Management, and Alberta Investment Management — own over $400 million worth of shares in the SPAC, and institutional ownership in the company is over 55%, according to data from Nasdaq.
That didn’t stop Redditors from making their case.
“It takes time to build momentum. GME did not happen in one day. Be Patience. Shorts/puts will try to spoil momentum, but we together hold strong and move step by step. we will start first day war tomorrow. Sleep well Warriors,” u/MadMax212121 said.
Additionally, the traders have started their own forum dedicated specifically to Lucid Motors. It’s called Lucid Wall Street Bets or r/LWSB and currently has around 5,000 members.
While that’s a far cry from the nearly 10 million users on the main Wall Street Bets forum, the Lucid traders are gaining momentum.
Attempts to crowdsource funding to “defend” certain stocks from falling share prices has become a common occurrence on Reddit. It’s a phenomenon that has come despite the Securities and Exchange Commission saying they are looking into possible misinformation on social media sites like Reddit.
Shares of CCIV recovered as much as 17% on Friday before paring gains.
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