At first glance, it might be hard to understand what’s so special about Spartan Energy (NYSE:SPAQ). After all, it’s just a blank-check company that merged with another company to help it go public. Yet, there’s something very special about SPAQ stock that’s worth your attention and perhaps even your investment capital.
As you might have guessed from the ticker symbol SPAQ, Spartan Energy is a special purpose acquisition company or SPAC. The company’s function was to raise money from initial public offering (IPO) investors and then merge with a relatively small electric vehicle manufacturer known as Fisker.
In late July, I gently poked fun at Fisker because the company bragged about its flagship vehicle’s “meatless interior.” Perhaps I found it unusual for Fisker to describe its upscale electric SUV in this manner. Moreover, at the time I characterized Fisker’s Ocean rollout as “clean in intent but murky in outlook.”
Today, I’m taking the other side of the argument in support of SPAQ stock. You likely won’t be seeing the Ocean on the roads for a while, but that doesn’t mean you can’t start a position in the stock today as the anticipation builds.
A Closer Look at SPAQ Stock
If it weren’t for the Fisker collaboration, there honestly wouldn’t be much to report about the SPAQ stock price. Prior to the middle of this year, SPAQ shares clung to the $10 area like a metal paper clip to a magnet.
As you might expect, the announcement of the Fisker SPAC changed everything for SPAQ stock. What followed was what I call the typical post-SPAC pop-and-drop:
- July 8: $10.80
- July 9: $14.96
- July 13: $19.36
- July 24: $13.36
It’s kind of like the post-IPO pop-and-drop, but it’s the 2020 version since this is turning out to be the “Year of the SPAC.” In any case, as of Aug. 25, SPAQ stock was trading slightly above $13 and going nowhere fast.
Gentlemen (and Ladies), Start Your Engines
But the slow build in SPAQ stock should be perfectly fine with prospective investors. This vehicle’s not built for speed, but is meant as a long term buy-and-hold.
I say this because production on the Fisker Ocean isn’t projected to commence until 2022. So, it’s not as if you’re going to see your neighbors sporting their fancy, meatless Oceans tomorrow or next week.
The idea, then, is you start your position today in anticipation of a buildup of interest in the Ocean. The post-SPAC hype has already come and gone, thank goodness. Now, investors can focus on the vehicles themselves, which are quite unique.
Just be aware that the 2022 rollout gives a lot of time for things to go wrong, as well. However, I expect that any snags in the rollout will be worked out by 2022 and all dips in SPAQ stock will be opportunities to accumulate more shares at a discount.
The Excitement Builds
Even the skeptics must concede that the Fisker Ocean is a vehicle like none other. Or at the very least, the company has done an outstanding job of presenting it as such.
Clearly, the Ocean isn’t designed to be an old-school muscle car. Rather, its appeal resides in the car’s design and sustainability. As Fisker describes it, the Ocean is “a fully electric SUV with premium styling and features [which] has been designed to be the world’s most sustainable vehicle, including extensive use of environmentally friendly and recycled materials.”
That’s quite a claim, though the company backs it up as the Ocean features a vegan (a.k.a. “meatless”) interior, a tire manufacturing process that utilizes discarded rubber waste and an optional solar roof designed to enhance fuel efficiency and reduce carbon dioxide emissions.
Pretty cool, you must admit. And plenty of other folks also think the Ocean is pretty cool, since there were 7,062 reservations and deposits for the vehicle by the end of July. Those buyers are located in 30 countries, thus indicating the global demand for this unusual brand of electric vehicle.
The Bottom Line
Sure, I made fun of the Ocean before, but the pre-orders bode well for Fisker and the anticipation is only likely to build from here.
Forward-thinking investors should start their positions in SPAQ stock today rather than wait for the Ocean rollout, by which time the share price is likely to be much higher.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
