Hennessy Capital surges 34% on merger – here’s what you need to know

Hennessy Capital Acquisition Corp IV Class A (NASDAQ: HCAC) has recently gained a fresh vote of confidence from investors. The Special Purpose Acquisition Company (SPAC) has seen an impressive gain of 34% in the share price over the past month. On August 18th, the company announced it had reached a definitive agreement with Canoo, a high growth EV manufacturer to merge both companies. The Hennessy Capital merger is expected to be completed in Q4 of 2020, hence driving bullish investor sentiment. This article will breakdown what you need to know about the HCAC merger and the outlook on Canoo moving into 2021.

Hennessy Capital Key Merger details

Firstly, the merger is set to take place before the end of 2020, which will merge the two companies into one under the name Canoo (NASDAQ:CNOO). The transaction is set to raise a $600 million in capital. The funding will assist with the development and manufacturing of the innovative skate-board platform. The merger is valued at $2.4 Billion pro form, setting the tone for another EV powerhouse entering the US market. The merger is still expected to take place within the bounds of the fiscal year of 2020. However, this is assuming shareholders approve for the merger to take place and “satisfaction or waiver of other customary closing conditions.”

“We are thrilled to partner with Canoo on their mission to reinvent urban mobility with a greener, simpler and more affordable portfolio of EV solutions. Unlike any other EV company, Canoo has created a go-to-market strategy that captures both B2C and B2B demand with the same skateboard architecture and technology that has already been validated by key partnerships such as with Hyundai.”

Daniel Hennessy, Chairman & Chief Executive Officer of HCAC

HCAC Investors expect big things in 2022

Initially, we have seen numerous EV innovators enter the US markets this year via the modern day capital raising method, SPAC. The merger will provide Canoo the much needed capital to iniate its expansion. The first vehicle is set to launch in 2022, in which it plans to manufacture its first 10,000 vehicles. The Business to Business delivery vehicle program is expected to launch in 2023.

Furthermore, Canoo has projected 2024 revenue of $1.43 billion and expansion of its manufacturing to deliver 50,000 vehicles. The company also predicts its first profit at $188 million during the year of 2024. The outlook does provide a positive spin for investors, however other EV manufacturers plan to initiate much higher delivery volumes and sales before 2024. However, investors are intrigued by the innovative “skateboard” technology. This differentiates Canoo from its US and Chinese competitors.

The skateboard architecture allows Canoo to provide enough interior space without creating a gigantic vehicle. Second, Canoo is targeting the millennial market with its subscription-based EV model and unorthodox interior design.

Summary

Before I begin, I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.

In conclusion, the closing timeline for the HCAC/Canoo merger has been the key driver in the share price. Upon competition of the merger, investors will have access to trade Canoo directly on the NASDAQ. The general outlook for Canoo looks strong however the company has a long way to go before they begin the delivery of their first vehicles. Therefore, the share price is likely to remain volatile during this period of low activity, whilst Canoo concrete their supply chain and planning for expansion.

We’ve partnered with Stake. Use our code “YIG” to receive a free stock when funding your new account.

Stake is one of the leading US trading platforms for Australian and UK investors. Click here to start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

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.