Shares of special purpose acquisition company Switchback Energy (NYSE:SBE) spiked on Nov. 17 on a wave that was triggered by good news in the electric-vehicle segment. Owners of SBE stock saw their holding rise some 15%.
The increase demonstrates the segment’s sensitivity and underscores the volatility associated with this immature area of the transportation market.
But don’t let that volatility scare you away from SBE stock. Because in addition to showing market sensitivity, this recent rise also indicates that Switchback Energy is poised for growth when given a nudge.
Rising Tide for SBE Stock
Switchback Energy shares have been on a general upswing since September, beginning in the lower teens. That climb accelerated a bit earlier this month, going from around $14 a share to the stock’s 52-week high of $20.99.
There are several contributing factors.
First, the markets are in a better mood thanks to positive reports on the novel coronavirus front. Two pharmaceutical companies said their vaccine candidates were 90% and 94.5% effective against Covid-19.
These announcements were welcomed by the market, even though they were preliminary reports on clinical trials and came via press statements as opposed to definitive scientific review.
Another factor is Switchback Energy is just weeks away from its $2.4 billion reverse merger with ChargePoint, a leading provider of electric-vehicle charging infrastructure in the United States and Europe. This merger, which will make ChargePoint a public company, is expected to take place in about one month or so.
Finally, SBE stock also benefited from a competitor’s announcement. Florida-based Blink Charging (NASDAQ:BLNK) said it would use a new system to manage its cables that should improve its operations. The company said the system cuts “the number of touchpoints” and better maintains cords and cables.
It is interesting that this announcement by a smaller competitor was seen by analysts as a positive influence on Switchback Energy stock. However, this segment of the EV arena is in its early stages and will be more easily pushed up or down than more established portions of the market.
Frankly, I think the good news about Covid-19 vaccines set the stage for the jump to take place. Hopeful investors are in a better mood, after all.
Praise for SBE
This is an early time in the arc of Switchback Energy. As a SPAC, its time as an independent company is limited. That doesn’t mean it stayed in the shadows, however. Several of my InvestorPlace colleagues have been upbeat about the pending merger with ChargePoint.
For example, Josh Enomoto writes recently that Switchback Energy was a good investment with a favorable long-term outlook. He said also said the stock was fighting headwinds created by the Covid-19 pandemic.
“But unlike so many speculative SPACs with questionable business models, ChargePoint has a real pathway toward long-term success,” Enomoto writes.
And Will Ashworth includes SBE stock on a list of 10 stocks set to ride the ESG investing wave over the next decade.
“Each time I walk by my local gas station, I can’t help but think about the Switchback/ChargePoint tie-up,” he says. “And that’s an excellent thing.”
The Bottom Line on Switchback Energy
The recent spike in the price of SBE stock is a reminder to investors that the reverse merger of Switchback Energy and ChargePoint is on the horizon. Slated to be completed by the end of 2020, the deal will make ChargePoint a public company and likely increase its profile in this emerging business.
As with any transportation alternative, accessible – and affordable – infrastructure is a an absolute requirement for electric-vehicle use to become a solid option for motorists in this country.
Investors interested in ESG choices in general and electric vehicles in particular should seriously consider SBE stock. It offers a way to play the EV trend without having to pick a vehicle manufacturer, as they all will have to plug in sometime.
On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C.