| | | Electric Car Stocks Boom Speeds Up With This GM-Backed $1.6 Billion Company
APARNA NARAYANAN
Investor's Business Daily
04:07 PM ET 08/03/2020
Electric truck company Lordstown Motors will merge with DiamondPeak ( DPHC), joining the surge in electric car stocks to emerge via a merger with a blank check company as investors hunt for the next Tesla ( TSLA). DiamondPeak stock surged.
The combined company will take the name Lordstown Motors and trade on the Nasdaq under the ticker symbol RIDE.
The deal includes a $500 million private investment in public equity, with General Motors ( GM) investing $75 million and institutional investors Fidelity, Wellington and BlackRock ( BLK) also investing in the electric vehicle startup, the companies said.
The transaction implies a $1.6 billion equity value for Lordstown. The companies expect the deal to close in the fourth quarter.
Last November, Lordstown purchased GM's Lordstown assembly plant, a 6.2 million square foot facility capable of producing 600,000 electric vehicles annually. In June, Lordstown unveiled a prototype Endurance pickup truck and has received more than 27,000 preorders representing more than $1.4 billion of potential revenue from commercial fleet customers, the company said.
Initial production of the Endurance electric truck is expected in the second half of 2021.
New Electric Car Stocks
Shares of DiamondPeak jumped 21% to close 12.39 on the stock market today. GM stock added 3%, Workhorse Group ( WKHS), which has a 10% stake in Lordstown Motors, leapt 23.6%. Tesla stock added 3.8%. Nikola, which reports quarterly results tomorrow, surged 21.6% as Deutsche Bank analysts rated shares at buy while Chairman Trevor Milton tweeted the company will have $940 million cash on hand by the end of the month.
Lordstown joins a crowded field of electric car stocks going public via mergers with blank check companies.
Those looking to go public include Karma Automotive, Fisker Inc. and Hyliion. Like DiamondPeak stock, blank check company Tortoise Acquisition ( SHLL) surged after announcing a merger with Hyliion, which will trade under the ticker "HYLN."
Electric car stock Nikola ( NKLA) already debuted June 4 after merging with blank check company VectoIQ.
Investors seeking to capitalize on soaring Tesla stock have fueled the rise of new electric car stocks. Governments and automakers are also setting massive goals for, and making huge investments in, emissionless technology.
Deals with blank check or special purpose acquisition companies (SPACs) can be a faster and more efficient way for startups to debut, but may be riskier for investors.
A SPAC is a shell company with no commercial operations, formed just to raise capital for buying an existing business.
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