At the intersection of the special purpose acquisition company (SPAC) hype and the electric truck craze stands Nikola (NASDAQ:NKLA), but Nikola stock’s not the only way to trade these two red-hot trends. Lesser-known DiamondPeak (NASDAQ:DPHC) is entering into the fray with its own electric vehicle SPAC, and traders are now paying closer attention to DiamondPeak stock.
As you may recall, Nikola went public via a SPAC to much fanfare earlier this year, after which the shares were available to the public for trading on June 4.
Some folks might feel that they’ve missed out on the opportunity to get in on the ground floor with Nikola.
Could DiamondPeak stock be Nikola 2.0, then? It could possibly give traders another chance to own an early stake in an electric truck SPAC. The thing is, you don’t just want to jump into one trade because you missed out on another trade. You have to learn about the company and assess it based on the company’s own merits.
With all of that in mind, let’s take a ride with DiamondPeak stock and see if the company is more than just another electric vehicle contender.
A Closer Look at DiamondPeak Stock
There really wasn’t much excitement surrounding DiamondPeak stock before traders found out that it will be a blank-check company entering into the electric-vehicle market. Thus, until August of 2020, DiamondPeak shares clung to the $10 area month after month.
The next thing you know, DiamondPeak stock went parabolic. As of midday Aug. 24, the shares are trading at exactly $14. Due to this startling price action, the trailing 12-month price-to-earnings ratio for DiamondPeak currently stands at a jaw-dropping 267.45.
But remember, we’re a visitor in the world of SPAC’s and electric trucks, where stocks haven’t been trading long enough for valuations to matter yet. For the time being, at least, sentiment is the primary driver of DiamondPeak stock.
It will take some time before true price discovery is achieved with DiamondPeak stock. Until then, expect lots of volatility and no discernible price range.
Seeking the Next Nikola
You’ll probably get a sense of deja vu if you’ve already studied the brief history of the Nikola SPAC. In the case of DiamondPeak, it’s a blank-check company that’s merging with electric truck company Lordstown Motors.
The purpose here is to take Lordstown Motors public without having to deal with the complexity and expense of a traditional initial public offering (IPO). As a result of the merger, the combined company will trade via the stock ticker symbol RIDE on the Nasdaq exchange (where NKLA stock also resides).
Lordstown’s implied equity value stands at $1.6 billion, so this is another big-ticket “unicorn” that’s generating plenty of buzz among stock traders and social-media pundits. Again, we’re seeing an awful lot of similarity to Nikola here.
What’s Different about DiamondPeak
Thankfully, DiamondPeak and Lordstown have some bragging rights of their own. For one thing, this merger has some mega-scale backers.
Among them are General Motors (NYSE:GM), which is investing $75 million in the SPAC. That’s a good sign because an automotive giant like General Motors wouldn’t just invest in any random company.
Other major investors include BlackRock (NYSE:BLK), Fidelity and Wellington. Again, the financial infusions should matter less to prospective investors than the seals of approval being given by these big-name firms.
Plus, there’s another General Motors connection. Specifically, Lordstown purchased a 6.2 million-square-foot assembly plant from that company. Reportedly, this massive facility will be able to produce 600,000 electric vehicles per year.
Moreover, there’s a tremendous buildup of pre-orders for Lordstown’s electric vehicles. In fact, the company has already received over 27,000 pre-orders for Lordstown’s Endurance pickup truck prototype. These pre-orders could potentially represent over $1.4 billion in revenues from commercial-fleet customers, according to the company.
The Bottom Line
Lordstown is an exciting company and isn’t simply a Nikola clone. DiamondPeak stock is speculative but interesting as Lordstown has plenty of pre-orders in progress and some heavy hitters in its corner.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.