Wait, another special purpose acquisition company (SPAC) in the electric vehicle niche? That is a legitimate question to ask when investigating shell company Pivotal Investment Corporation II (NYSE:PIC) and the company it is merging with, XL Fleet. There have been plenty of SPACs in 2020, so you might be wondering what makes PIC stock different.
Since it is really nothing more than a blank-check company, the market isn’t going to get hyped about Pivotal Investment Corporation II. Rather, the focus will be on XL Fleet, especially since this is a billion-dollar startup specializing in commercial truck electrification.
Electric trucks are a hot item this year, but electric vehicle SPACs are not all built the same. As an informed investor, you need to focus on trusted brands rather than hope and hype.
So, is XL Fleet an established brand with a strong value proposition for prospective shareholders? If so, then PIC stock could be a bold addition to an electric vehicle portfolio.
PIC Stock at a Glance
The first thing to know is that upon the closing of the SPAC deal between Pivotal Investment Corporation II and XL Fleet, the combined company will simply be called XL Fleet. Moreover, this company will be listed on the New York Stock Exchange under the ticker symbol XL.
So now, let us take a closer look at the roller-coaster price action of PIC stock. Prior to the announcement of the reverse merger, there was not much movement in this stock. Month after month, the share price stayed close to $10.
That changed quickly when the deal with XL Fleet was revealed. Thus, in the middle of September, PIC stock jumped to its 52-week high price of exactly $14.
Interestingly, the pop was followed by a share-price drop. On Oct. 23, PIC stock closed at $10.33, marking almost a complete round trip to $14 and back.
Is this a reflection of real problems with the company? Or, is this another chance for investors to get in at a good price? That is the billion-dollar question, so let’s drill down to the electric truck startup at the heart of this fascinating SPAC.
Known and Trusted
Other electric vehicles companies might incur some skepticism because they are not trusted brands yet. In some cases, these companies haven’t even sold any products or generated any revenues.
Therefore, I can understand if there is initial skepticism surrounding PIC stock. In the case of XL Fleet, however, this is an established and trusted brand among a number of high-profile clients.
Indeed, XL Fleet was well-known as a provider of electrified power train solutions for commercial fleet vehicles in the U.S. and Canada prior to the SPAC announcement. I will let the company spit some stats for you now:
“XL has become a trusted brand for over 200 of the largest commercial and municipal fleets in North America, with more than 3,200 XL systems deployed and over 130 million miles driven by customers to date.”
No Debt and Expansion Plans in View
Some folks might focus on the SPAC’s $1 billion anticipated implied enterprise value, which would qualify it as a unicorn. Yet, there is another feature of this SPAC that is much more impressive.
Specifically, this business combination will have “no material debt expected to be outstanding.” That is something you won’t find in every startup, especially among newer companies in the EV space.
Plus, not only is XL Fleet apparently debt-free so far, but the company may be in expansion mode. The company reports that XL Fleet’s electrification systems are already available on “a wide variety of Class 2-6 vehicles.”
However, XL Fleet is also preparing to supply its systems to Class 7 and Class 8 vehicles starting in 2022. Overall, it sees the total addressable market as exceeding $1 trillion. Clearly, XL Fleet is seizing a blue-sky opportunity with astounding growth potential.
The Takeaway
This is not the time to get “SPAC fatigue” as XL Fleet stands out due to its trusted brand and ambitious expansion plans. So, if you are ready to try out a new and unique electric vehicle SPAC, consider buying a few shares of PIC stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
