Shares of Pivotal Investment Corporation II (NYSE:PIC) surged in early trading Wednesday after the special purpose acquisition company set Dec. 21 for a stockholder vote on its merger with XL Fleet. PIC stock jumped as much as 13% following the market open.
Pivotal is just the latest of Wall Street’s hot SPACs, public companies created for the sole purpose of taking another business public. This typically has the merged company adopting the previously private company’s name and changing its stock ticker. In this case it is XL Fleet, a billion-dollar startup specializing in commercial truck electrification.
The XL Fleet buzz is based mostly on a host of deals it already has with several blue-chip companies including FedEx (NYSE:FDX), PepsiCo (NASDAQ:PEP) and Verizon (NYSE:VZ). Investors should note that the broader wave of electric consumer vehicles has also sparked an interest in electrifying commercial fleets. Unlike rival Lordstown Motors (NASDAQ:RIDE), XL Fleet does not make its own vehicles. Instead, it outfits existing commercial-grade trucks from the likes of Ford (NYSE:F) and General Motors (NYSE:GM).
XL Fleet SPAC Merger Builds on Electrification Boom
As companies large and small seek to cut their carbon emissions, XL Fleet provides its customers with analytics on how its electrified fleets are helping reduce their environmental impact. XL Fleet has a 12-month sales pipeline worth $220 million. It is also targeting revenue of $21 million in 2020 and $75 million in 2021 in pursuit of a $1 trillion total addressable market.
Tod Hynes, XL Fleet founder and chief strategy officer, said, “Since announcing the merger in September, XL Fleet has maintained our strong momentum, achieving record quarterly revenues, launching our XL Grid charging infrastructure division, expanding our plug-in hybrid electric product line onto GM vehicles and securing meaningful new orders.”
Investors have been drawn to the SPAC’s $1 billion anticipated implied enterprise value, which would qualify it as a unicorn. But what’s even more impressive is that this business combination will have “no material debt expected to be outstanding once the deal is done.”
No Time for SPAC Fatigue
So, is this SPAC worth consideration for your portfolio or just the latest twist on a back-door capital raise? InvestorPlace analyst Louis Navellier advises that 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, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.
