Back in early November, special purpose acquisition company (SPAC), Tuscan Holdings (NASDAQ:THCB) announced its intention to conduct a reverse merger with electric-vehicle battery firm Microvast. With that, another high-profile SPAC came into the limelight and the trading volume of THCB stock exploded.
At that time, Tuscan Chairman and CEO Stephen Vogel reported that Microvast’s battery technology was already installed in more than 28,000 vehicles globally. Moreover, Microvast’s founder, Chairman and CEO, Yang Wu, asserted that his company was expected to generate over $100 million of revenue during the financial year.
So, we already have a compelling argument in favor of owning THCB stock. On the other hand, its share price has already increased quite a bit.
Is the stock still a ground-floor opportunity, then? That’s the billion-dollar question, so let’s start off with a deep dive into the brief but fascinating history of this fast-moving name.
A Closer Look at THCB Stock
Tuscan’s price action resembles an airplane taxiing down a runway, then taking off towards the skies.
We could say that the runway phase lasted through much of 2019 and 2020 as THCB stock stayed near $10 month after month. That’s not unusual for a pre-deal SPAC stock because investors usually wait to find out what company the SPAC will merge with before buying its shares.
After the merger with Microvast was announced, Tuscan catapulted higher, reaching $12 by early December. The share price continued upwards from there, but there were buy-able dips along the way.
The most recent price dip occurred in late December, as the shares declined from the $20 area on Dec. 28 to $17.10 on Dec. 31. Lower price points aren’t necessarily a bad thing, as they could present an opportunity to accumulate more shares.
Waiting for the Deal to Close
If you’d like to get the lowdown on the merger between Tuscan Holdings and Microvast, check out InvestorPlace contributor Sarah Smith’s article on this topic. I definitely consider it to be required reading for those who are considering buying THCB stock.
As Smith points out, there’s no definite target date for the merger deal to close. Nor do we know what the stock’s new ticker symbol will be.
We can anticipate, however, that the combined companies will have a $2 billion valuation. And Tuscan’s market capitalization was only $547 million as of yesterday’s close.
So there may still be room for the shares to climb while investors wait for the “big day” to arrive, whenever that day might be. It’s also nice to know that Microvast has actually developed an existing product with actual sales. That’s something we can’t say about every high-profile SPAC partner on the market today.
This Is No Newcomer
Not every investor has heard of Microvast. Yet this company’s not a newcomer to the electric-vehicle battery market, by any means.
In actuality, Microvast has been in existence since 2006. The company’s primary focus is “ultra-fast charging, long-life battery power systems with superior safety for electric vehicles.”
Microvast achieved a major milestone in December of 2018 as the company reported 24,000 vehicles in commercial operation with Microvast battery systems worldwide. By that time, Microvast had recorded more than 2.3 billion kilometers traveled with its products.
In March of 2020, Microvast announced that the United States Advanced Battery Consortium had awarded the company a $4.5 million contract. The consortium charged Microvast with heading “a program to develop low-cost/fast-charge batteries for electric vehicle applications.”
Clearly, Microvast is a highly experienced company that’s capable of generating strong revenues. Therefore, even if we don’t know when the merger will close, we can still remain confident in Microvast’s profit potential.
The Bottom Line
At some point in the future, THCB stock is likely to disappear and be replaced by a new, post-merger stock.
That shouldn’t bother the current owners of the shares, however. Microvast is a company with a product that’s already in demand. Thus, a position in Microvast through THCB stock could offer outstanding returns even before the merger deal is finalized.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.