One member of the ever-growing list of electric vehicle (EV) special purpose acquisition companies (SPAC) is CIIG Merger (NASDAQ:CIIC) and CIIC stock is proving to be a dandy, having nearly tripled over the last six months.
That includes a 10.18% gain on Jan. 14, which was largely attributable to Wolfe Research starting coverage of the name with some glowing commentary. The research firm tagged CIIG stock with a $50 price target, implying upside of 70.41% from the Jan. 14 close.
CIIG Merger stands out for other reasons, many of which are comparison. In an EV landscape chock full of companies that more aspiring and pretenders than ready to roll and contend, CIIG checks some important boxes. Notably, it’s a blank-check firm with an agreed upon target: UK-based Arrival.
Unlike so many of its competitors, Arrival already has customer(s), including United Parcel Service (NYSE:UPS) and support from an established automaker via a relationship with Hyundai (OTCMKTS:HYMTF). These are traits many EV companies, particularly some born out of SPAC mergers, can only dream of.
CIIC Stock: A Lot to Offer
Another trait in Arrival’s favor is that it focuses on light commercial vehicles with its Arrival Bus and Arrival Van offerings. That keeps it out of the way of competing with the likes of Tesla (NASDAQ:TSLA) and Nio (NYSE:NIO). While an electric bus or van delivering online retail packages lacks the cache of a Tesla product, investors shouldn’t sleep on the opportunity set Arrival has ahead of it.
“Light commercial vehicles are the fastest growing market segment, and with increased reliance on public transport, the forecasted market for vans and buses totals $430 billion by 2025,” according to the company.
On that note, Arrival already has signed orders of $1.2 billion. Additionally, the stock isn’t as richly valued as so many EV names. With an enterprise value of $5.4 billion, Arrival trades at just 0.4x estimated 2024 revenue of $14.1 billion. The company’s enterprise relative value relative to its total addressable market (TAM) is just 1.4%, according to Arrival data.
“The market opportunity for electric vehicles is unprecedented. Demand for vans is projected to grow 37% by 2024. Combined with a greater reliance on public transport, the addressable global markets for both vans and buses are forecasted to rapidly increase,” notes the company.
Alone, the estimate TAM for electric vans is $280 billion. That’s reasonable when considering all those Amazon (NASDAQ:AMZN) vans we see around our neighborhoods. Even if Amazon never becomes an Arrival customer, the company has a commitment from UPS and the applications of delivery vans are almost boundless. That indicates Arrival doesn’t need to capture every electric van customer. But if it seizes even a merely respectable percentage of overall EV commercial light vehicle market, investors could be rewarded.
Arrival Has Diversity
Another element investors mulling CIIC stock ought to consider is the company’s diverse product pipeline. Of its $14.1 billion revenue estimate, Arrival estimates 49% will be derived from vans. Another 17% will come from large vans. Electric buses and small vehicles should account for 22% and 12%, respectively.
That’s enviable depth. Depth is a rarity in the EV space where so many upstarts are focused on one, maybe two products.
Arrival also sports a tech-driven production process that is powered by efficiency and reliant on engineers, many of whom have software backgrounds. Not only would Arrival’s product methodology be the envy of any legacy automaker, it keeps costs to a minimum. This is vital to any young company in a production-intensive business.
Add that into the company’s near cornering of the electric bus market, limited competition in vans and a deep pipeline. This makes CIIC stock a SPAC to embrace over the near term.
On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Todd Shriber has been an InvestorPlace contributor since 2014.
