DiamondPeak Holdings (NASDAQ:DPHC) is another electric vehicle “EV” company that has joined the competition. Every few weeks, it seems, we get a new EV company to add to our watchlists. And while some of the other new-entrant EV stocks are not of top-tier caliber, DiamondPeak stock has the potential to be a big winner in the space.
WorkHorse’s former chief executive took the reins at a new division to build an electric light truck and purchased an old factory from GM. The resulting company, Lordstown, is now merging into DiamondPeak to create this emerging EV company.
Like with many special purpose acquisition companies (SPACs), DiamondPeak stock will take on a new ticker symbol after the deal closes. Instead of DPHC, it will trade under the much more memorable “RIDE” ticker come Q4.
While it’s still early in the company’s evolution, arguably Lordstown has already surpassed its predecessor WorkHorse. Lordstown has key backers including GM and Fidelity Investments, a ton of pre-orders, and a compelling business model. Nothing is guaranteed in the fast-moving EV arena, but DiamondPeak stock has a lot of positives going for it.
A Closer Look at DiamondPeak Stock
We’ve had what seems like a million new EV stocks start trading over the past year or two, and some of them are getting positively weird in the effort to stand out from the crowd. We have not one but two different companies trying to sell three-wheeled electric vehicles, for example. These companies are fun and potentially profitable diversions, but are fairly unlikely to hit it big in the mainstream vehicle market.
Then you’ve got the EV companies that are selling a grand vision of the future. There’s Tesla (NASDAQ:TSLA) of course, but that’s not all. Look at the recent drama around Nikola (NASDAQ:NKLA) and whether or not its proposed hydrogen economy of the future is realistic or a potential fraud.
DiamondPeak aka Lordstown has thankfully avoided these sorts of issues. Instead, Lordstown has a simple value proposition. It wants to make sensible and practical light trucks. The company’s chief executive officer (CEO) describes it as a normal work truck, except that it will be capable of getting the equivalent of 75 miles per gallon in fuel efficiency.
Lordstown isn’t building in many of the luxury features of other electric vehicles. The company wants to build a truck that looks like other trucks on the road, rather than reinventing the wheel.
While there’s certainly plenty of appeal in more exotic designs such as Tesla’s CyberTruck, Lordstown’s approach is also reasonable. Many hit products arise from improving an existing popular product — in this case making a humble truck cheaper to operate — rather than building something totally new.
As we’ve seen with other EV companies lately, it’s one thing to sketch up an EV prototype and another thing entirely to produce it successfully at commercial volumes. So we’ll have to wait and see if Lordstown can deliver the goods. For now, though, the company’s business model seems extremely promising. It’s not hard to see how this could be a winning business plan.
Traders have already made huge moves in DiamondPeak stock. Shares have nearly tripled off the original SPAC issuance price at $10. With gains like that already in the rearview mirror, this is a time for caution.
Yes, EVs remain hot, but the overall stock market is starting to sag pretty heavily. If that risk aversion spreads to the EV space, DiamondPeak would feel the heat as well.
Plus, there’s still the actual merger to complete and change over to the RIDE ticker symbol. At some point, DiamondPeak will clean up the outstanding warrants from the SPAC offering. That will create more long-term certainty for DiamondPeak, but at the expense of near-term share dilution.
With all these factors in mind, this isn’t the right time to pile into DiamondPeak stock. If you want to ride with DiamondPeak stock, wait until this winter to hop on up into passenger’s seat. Lordstown looks to be a long-term top tier player in the EV industry, but that doesn’t necessarily mean that the stock will keep surging in the near-term.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.