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In an electric vehicle sector that appears to be overheated, Spartan Energy Acquisition (NYSE: SPAQ) has experienced unexpected exchanges. SPAQ’s actions soared after a merger with electric vehicle manufacturer Fisker, but has noticed a sharp drop since then.
Indeed, SPAQ traded as high as $21.60 not long after announcing the merger. It’s now below $13. By the standards of recent SPACs (special purpose acquisition companies), less than 30% upside from the $10 initial price for SPAQ stock qualifies as a disappointment.
In fact, Nikola (NASDAQ: NKLA), which has made the SPAC route public, has almost quadrupled since its pre-merger levels.
The brief edition of the SPAQ stock case is that even a niche electric vehicle manufacturer can create a price for shareholders. Electric cars are still in diapers. Adoption will only accumulate over time through government subsidies, increasing awareness of climate change and other environmental factors, and larger cars.
Fisker has the possibility to create a truly glorious vehicle. The company is named after Henrik Fisker, who designed cars such as the BMW (OTCMKTS: BMWYY) Z8 and several Aston Martin models (OTCMKTS: AMGDF), as well as a motorcycle and even a superyacht.
Certainly, Fisker’s first effort failed. Fisker Automotive produced the Karma add-on, but ended up promoting its assets to a Chinese company for a bite. The bankruptcy of A123 Systems, Fisker’s battery supplier, was a key factor, however, apart from that, Fisker was never accepted into the market.
Of course, this is a very different market than in 2011, when the Fisker Karma was first delivered. Tesla (NASDAQ: TSLA) has brought electric cars into mainstream with its Model 3. Ford (NYSE: F) and General Motors (NYSE: GM) are also moving aggressively through space.
This percentage will increase for years, and probably decades, to come. This expansion, in turn, will create plenty of room for many winners. Fisker would possibly be one of the winners, and that would be more than enough to take credit for an existing proforma market capitalization of less than $4 billion.
The appeal of THE SPAQ’s inventory right now is that the marketplaceplace turns out to be comparing this marketplaceplace expansion with other electric vehicle games, but (until a decent rally on Monday) had sold SPAQ.
Certainly, recently there have been sales of small stocks of electric vehicles. But TSLA has surpassed the $2,000 mark and now has a market capitalization of $365 billion. NKLA, as noted, has risen almost 300% from its $10 merger value and has a market capitalization of more than $15 billion.
Nio (NYSE: NIO) is an appeal parallel to SPAQ, as corporations a) are turning to high-end SUVs and b) outsource manufacturing. Nio is worth $17 billion after about 600% of the lows in early April.
The action of SPAQ simply did not have the momentum that other EV games have. As noted, it has not even earned the taste of the maximum spaC fusions. It would seem that at some point there is a clever possibility of change.
However, the question is when this replacement might happen. A key challenge for SPAQ inventory right now is the lack of catalyst.
There is a possible catalyst. As noted, Fisker plans to outsource production. Your initial plan to marry Volkswagen (OTCMKTS: VWAGY) to use your electric vehicle platform. But those discussions failed.
Success with Volkswagen, or your partner, can give SPAQ’s inventory a much-needed dose of optimism. But once this happens, investors will have to be patient.
This short and medium term in the long term is of concern, given potentially widespread spatial tests. The SPAQ’s inventory may perform better due to its recent decline, but it is also conceivable that it will be further dragged down if the optimism of electric vehicles cools down.
As a result, I’m not sure Spartan Energy’s inventory is an acquisition at this time. At least it will take patience, and maybe a little negotiation. But over time, ESE SPAQ has a great chance of generating counterfeit and potentially exceptional returns.
Vince Martin covered the monetary sector for nearly a decade to InvestorPlace.com and other media. It has no position on the values mentioned.
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