Two red-hot trends in the market are electric vehicles and special purpose acquisition companies (SPACs). At the crossroads of these two phenomena is CIIG Merger (NASDAQ:CIIC), which plans to take U.K.-based electric bus and van maker Arrival public. So basically, you can invest in Arrival through a position in CIIC stock.
Arrival is different from many other electric vehicle companies because it focuses on light commercial vehicles. The company’s Arrival Bus and Arrival Van segments provide electric buses and vans which are ideal for delivering online retail packages.
That’s a lucrative market to be involved with. Arrival forecasts that the market for vans and buses will reach a whopping $430 billion by the year 2025.
If you like that number, then I’ve got plenty more on deck. So, sit back and enjoy the ride as we take a glance at the exciting price action of CIIC stock.
A Closer Look at CIIC Stock
One thing about SPAC stocks is that often, they tend to taxi down a runway before taking off. Thus, for much of 2020, CIIC stock didn’t stray very far from the $10 area.
That’s because the investing public was waiting for more information about CIIG Merger’s future plans. As you may have observed, sometimes SPAC stocks jump quickly as the word gets out about which company will be the merger target.
It wasn’t until mid-November when CIIC stock really started revving up. Amazingly, the share price leaped to a 52-week high of $37.18 on Dec. 7.
Hopefully, you didn’t attempt to chase CIIC at that price level. A retracement was due, so the stock backed away from its peak and is now at $26.61.
If you’re not positioned in CIIC stock yet, the pullback could present an opportunity to jump in at a more favorable price point.
Facts and Figures
I promised to provide more numeric data to back up my bullish stance on CIIC stock. So, like one of Arrival’s electric vans, I will now deliver the goods.
Here are some facts and figures, courtesy of Arrival:
- The demand for vans is expected to grow 37% by the year 2024.
- For vans, the forecasted total addressable market opportunity is $280 billion; for buses, it’s $154 billion.
- Arrival signed contracts valued at up to $1.2 billion.
- The enterprise value of the combined company is $5.4 billion.
- The combined company’s projected 2024 revenue is $14.1 billion.
- Arrival has over 1,300 team members.
- Roughly 90% of Arrival’s employees are engineers.
- Arrival’s vehicles offer up to a 55% reduction in the total cost of ownership compared to the company’s competitors.
With all of that data in mind, it would be tough to find reasons why Arrival wouldn’t take an early and clear lead in the bus and van electrification movement.
While not every market trader has heard of Arrival, some financial experts are taking notice of the company.
Wolfe analyst Scott Group, for instance, appears to be firmly in the bull camp. He cites three reasons to favor this company as an investor:
[Arrival] could be one of the best positioned long-term electrification plays given its 1) favorable short-haul end markets, 2) competitively priced vehicles vs. ICE [internal combustion engine] incumbents, and 3) unique cost advantages driven by its innovative approach to manufacturing.
Cramer further gushed that Arrival is “revolutionizing the entire auto industry,” citing that the company makes “all their own components” and will “be cost-competitive with gasoline and diesel.”
The Bottom Line
I would concur with the aforementioned experts in their favorable assessment of Arrival. It’s a company that’s well positioned to lead the pack in a high-growth niche market for electric trucks and vans.
And as for CIIC stock, if it’s backing away from the highs, then that could be your chance to own a unique SPAC stock at a better price point.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.