Spartan Energy Acquisition (NYSE: SPAQ), soon to be merging with Fisker, is the new EV kid on the block. While SPAQ is relatively fresh on the scene, its meteoric rise mirrors that of EV controversy Nikola Motors. However, the SPAQ momentum is starting to find a more sustainable equilibrium. Because after the Fisker merger announcement, the news has remained quiet. Thus, today’s article will bring our readers up to speed on the merger developments, why the institutions are bullish, and whether YIG sees value.
Table of contents 1. SPAQ Fisker merger is set for Q4 2020 2. Why are the Institutions backing SPAQ? 3. Does YIG see value?
SPAQ merger given the green light
SPAQ will merge with Fisker during Q4 of 2020 to form a great EV company. The merger values Fisker at a whopping $2.9 billion but will only see the EV company reap $1 billion. A vital part of the $2.9 billion is $500 million in common stock at $10.00 per share for Private Investment Public Equity (PIPE). However, Fisker is not putting a cent of equity to waste as the funding will aid developing the all-electric Fisker Ocean. Ultimately, providing investors with an exciting growth prospect post-merger.
Why are institutions backing SPAQ?
The million-dollar question is, why the ‘smart money is backing SPAQ? Simple answer, because the institutions see potential. However, it might not be potential in the company that the institutions see. For example, it might be the opportunity to get in on a speculative EV company early and make some nice bank. YIG sheds light on varying institutional agenda not to be pessimistic. Instead, we are stressing the importance of understanding why the smart money flowed in, to begin with. Especially when institutions own 76.57% of SPAQ.
Moreover, the average price that the institutions snapped up was $10 a share. Consequently, most institutions holding SPAQ shares are sitting on a 20% profit right now. Considering there was no huge sell-off, it seems the institutions are holding out for a more significant profit margin.
Does YIG see value in a SPAQ investment?
Before I begin, I am obliged to remind our viewers that this is not financial advice but rather investment commentary from extensive research
Short answer: Riding out the merger hype holds the most potential (opinion not advice)
Short term merger momentum
Riding the Fisker merger hype seems attractive, especially as Nikola and SHLL made tremendous strides. However, timing your entry on a trending stock is no easy feat. Because in short term trades the money is usually made at what price you snap up the shares. Considering SPAQ is off the back of a bearish decline and is near $10, which is when institutions bought in, now could be a possible entry (opinion not advice). Treat SPAQ’s share price activity like a train resting at the station for a few minutes before potentially taking off (opinion not advice). However, riding the wave does not go without its risks. Thus, YIG stresses the importance of a modest stop loss and profit target, preferably before the PIPE investors sell. Also, if the words PIPE or SPAC sound foreign, then you need to read this before investing in SPAQ. Otherwise, you will be at an educational disadvantage.
Long-term SPAQ game
Some investors might look at SPAQ’s short-term future and see an unfrightening level of volatility. Hence, some investors may lean towards a more long-term investment. Most signs, such as growing EV fever and the influx of retail investors after the merger, suggest that SPAQ holds future upside. However, timing your entry is crucial in a long-term investment. YIG would like to point out that investing during the hype usually distorts the stock’s true value. Ultimately increasing the difficultly for investors to enter at the right price. Waiting until the post-merger excitement cools off should present a window to snag SPAQ shares at a discount (opinion not advice). Moreover, investors should understand the future automotive landscape regarding electric and hydrogen (blue gas) and how that might affect their SPAQ investment.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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Written by Patrick McLoughlin, Senior Manager of YIG.