Following a massive boom over the past year, special purpose acquisition companies (SPACs) have seemingly fallen out of favor since February as investors question some of the lofty valuations that private companies have been fetching in definitive agreements. The Securities and Exchange Commission (SEC) has started to scrutinize SPACs more closely, fearing that average investors could end up getting harmed from the exuberance. The securities regulator recently proposed a change that would impact how warrants are accounted for, which could potentially make reported earnings more volatile. Short-sellers have also been targeting some SPACs to capitalize on the SPAC pullback, amplifying the selling pressure. Here’s some evidence that short-sellers are pushing down Churchill Capital IV (NYSE:CCIV), a high-profile SPAC that’s merging with Lucid Motors. Image source: Lucid Motors. The biggest and most profitable SPAC short Recent data from short-selling analytics firm S3 Partners shows that bears have significantly increased their short positions over the past 30 days. S3 Partners uses proprietary models to estimate real-time data, which can be more useful than the official data that exchanges provide twice per month. Of the 885 SPACs that S3 Partners tracks on its analytics platform, Churchill Capital IV has seen the largest increase by far. Currently, approximately 13.7% of Churchill Capital IV’s float is sold short, according to S3 Partners. The total dollar value of those bearish positions is around $603 million, which has increased by a whopping $178 million over the past 30 days. The next highest increase in short bets was Forest Road, which is merging with Beachbody and Myx Fitness in a rare three-way merger, at just $25 million over the past 30 days. The data makes it clear that shorts are disproportionately targeting Churchill Capital IV by a significant margin. So far, it’s working out quite profitably for the bears. Churchill Capital IV has also been the most profitable SPAC short over the past 30 days, generating overall mark-to-market profits of $249 million, or a 34% return. Why shorts are targeting Churchill Capital IV There are a few likely reasons why Churchill Capital IV has attracted so much short interest. First off, the stock had run up to unsustainably high levels of around $65 prior to confirming the merger with Lucid. Once the reality of the deal set it, the stock plummeted and continued to pull back. Additionally, there are no positive fundamental drivers in the near term for Churchill Capital IV. The SPAC is currently in the process of closing the merger with Lucid, and the aspiring electric vehicle (EV) maker recently decided to delay the launch of its flagship Air sedan into the second half of 2021. In the meantime, Lucid continues to open new stores to expand its retail network, which will help build brand awareness. Eventually, those locations will be important to conduct direct sales, but that will come after Air deliveries commence. Long-term investors will need to be patient for the next several months and expect plenty of volatility as short-sellers capitalize on the absence of positive news. Shares will likely be range-bound for a bit. However, that doesn’t mean that long-term investors can’t benefit. The stock looks particularly compelling at $20, and patient investors can now buy shares on the cheap. This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.