Churchill Capital II Stock Forecast: Buying stock in a company with a well-known brand is pretty straightforward. You already know the industry you are putting your money into, and a bit of research gives you an in-depth understanding of the organization’s financials. Your investment is a vote of confidence in the company’s future profitability, and it is based on an array of factors specific to that business.
Investing in Special Purpose Acquisition Companies (SPACs) is quite different. Investors buy shares in a publicly traded company that doesn’t yet have a product or service. Funds from stock sales are used to facilitate a future merger or acquisition. The term for this is “blind pool” – as in, the investment is blind, because there is no stated investment goal established for the funds raised by stock sales.
The SPAC’s leadership is responsible for developing investment goals, and they are given broad discretion to make decisions.
Churchill Capital I, a SPAC, was very successful. The company initially raised $690 million in its September 2018 IPO, and in May 2019, under the guidance of CEO Jerre Stead, Churchill merged with Clarivate Analytics – a global leader in accelerating the pace of innovation through insights and analytics.
Clarivate Analytics vs Churchill Capital
Stead stayed on with the combined Churchill Capital/Clarivate Analytics organization. It now operates as Clarivate Analytics Plc, and it started trading shares and warrants on the New York Stock Exchange and NYSE American under the symbols CCC and CCC WS.
All in all, the move has benefitted Churchill investors, and the combined company has already met its 2024 share price goals.
The team that founded the original Churchill Capital – minus Stead – is ready to try again. In June, they launched Churchill Capital II – another SPAC. Will this SPAC be as successful the second time around? Specifically, is Churchill Capital stock a buy? What is the Churchill stock forecast?
Should You Invest In SPACs?
Some investors look at a SPAC IPO as an IPO for an as-yet undetermined company. The IPO capital is held in a trust account while SPAC leaders evaluate opportunities and select an appropriate investment.
Fortunately for shareholders, there is a time limit on this process. If the SPAC does not find the right partner for a merger or acquisition within the time period specified by the prospectus, the funds are returned to shareholders. That period is typically 24 months, with the possibility of a short extension if the SPAC has executed a letter of intent.
In short, SPAC investors pool their money through the purchase of shares, trusting that the SPAC will make smart, profitable investment decisions that benefit shareholders.
Unlike traditional stock purchases, buying shares in a SPAC isn’t as much a vote of confidence in the company’s future profitability as it is a vote of confidence in the experience and expertise of the SPAC’s leaders to generate profit.
That point begs the question, who are Churchill Capital’s leaders? Does management have the experience and expertise to make Churchill Capital stock a buy?
Churchill Capital Is Ready To Pounce
Churchill Capital Corp II, as it is officially referred to in its prospectus, brings together substantial talent. At the top, Michael Klein is returning as Chairman of the Board of Directors. Klein was a founder and key member of the first Churchill Capital project, and he is the founder and managing partner of M. Klein and Company.
However, that isn’t the most interesting aspect of Churchill Capital II’s leadership structure. The company has enlisted a group of Operating Partners with experience as senior leaders in Fortune 500 companies. They come from a wide variety of industries, which opens the door to a larger selection of potential targets.
As with every SPAC, Churchill Capital’s goal is to find a partner for merger or acquisition – one that can benefit from Churchill’s investment of cash, as well as the support and guidance available from the experts running the SPAC.
The partnership will be a win/win for both companies. Churchill Capital investors profit from the transaction, and the acquired company gains the critical resources necessary to realize its full potential – fast.
Churchill Capital II had a successful IPO in June 2019, raising $690 million. It now trades on the New York Stock Exchange under the symbol CCX. So far, there is no word on which company might be selected for acquisition, but analysts aren’t expecting to wait the full 24 months. After all, Churchill Capital I identified its partner and executed a letter of intent in less than five months. What does that mean for Churchill Capital II?
Is Churchill Capital Stock a Buy?
While many Churchill Capital fans are disappointed that Jerre Stead isn’t part of the newest Churchill Capital venture, the rest of the original team is intact. Better still, the novel concept of Operating Partners makes a profitable acquisition more likely.
Those who invested in Churchill Capital’s September 2018 IPO were well-pleased with the results. Assuming they held their stock and warrants through May 13, 2019, they realized a total return of roughly 51 percent, and they saw a 1.5x multiple on their investment in just eight months.
Certainly, there are no guarantees that the Churchill Capital II team will pull off the same returns this time around – but there is no reason to think they won’t. They have a lot of their own money invested in this new venture, and it stands to reason they will make every effort to generate profits for themselves and their shareholders.
It’s worth noting that shares in Churchill Capital II were in high demand when the company launched its IPO. Initially, the plan was to raise $400 million, but the final number was $690 million. Overall, if you are comfortable with the concept of investing in a SPAC, Churchill Capital is a solid choice.
Learn more about investing in Special Purpose Acquisition Companies from the experts at Financhill – where many of the world’s smartest investors go for information.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.