It’s a story you’ve probably heard before. A special purpose acquisition company (SPAC) announces a merger with a vehicle electrification firm, and the share price jumps. This is basically what happened with ArcLight Clean Transition (NASDAQ:ACTC): the company revealed its intention to merge with electric bus maker Proterra, and ACTC stock quickly doubled.
Proterra is a unique company. An argument could be made that multiple other electric-vehicle makers are quite similar to. In contrast, Proterra doesn’t really resemble Tesla.
That’s good news for anyone who’s looking for an electric-vehicle SPAC stock that stands apart from the rest. Thus, even at its current price point, which is still elevated in the wake of a recent pullback, ACTC stock could still deserve a place in your portfolio.
A Closer Look at ACTC Stock
ArcLight Clean Transition announced its initial public offering (IPO) on Sept. 22, 2020. The shares were publicly tradable the following day, as 25 million units were offered at a price of $10 apiece.
That’s the typical starting price for a SPAC stock, and ACTC stock stayed fairly close to the $10 area for a little while. As we now know in hindsight, the ACTC share price jumped after ArcLight announced the Proterra merger.
Jan. 12, 2021 was the date of that announcement, and traders promptly pushed the ACTC stock price to $25 on that day. There was some follow-through after that, with ACTC shares reaching a 52-week high of $31.06 on Jan. 19.
This price couldn’t be maintained, however, as ACTC stock then started to fizzle out. Yesterday the ACTC share price settled at $23.25. Still, that’s quite a bit higher than the IPO price.
One Company, Three Businesses
I mentioned earlier that Proterra, with which ArcLight will merge, is unique among EV firms. Of course, I don’t expect you to just take my word for it.
So I’ll explain Proterra’s particular value proposition now. Proterra is effectively three businesses in one.
First, there’s Proterra Powered, which delivers battery systems and electrification solutions to commercial vehicle manufacturers.
Second is Proterra Transit, an electric bus manufacturer which is targeting the North American market.
Then there’s Proterra Energy, which offers end-to-end, turnkey charging and energy-management solutions
Between those three businesses, Proterra is poised to capture a sizable swath of the electric transit vehicle market.
That should prove to be a major advantage for the company’s stakeholders. Proterra is a truly diversified, three-pronged business.
Miles Ahead of the Competition
Proterra Chairman and CEO Jack Allen summed it up concisely, saying, “After delivering our first electric transit bus a decade ago, Proterra has transformed into a diversified provider of electric vehicle technology solutions to help commercial vehicle manufacturers electrify their fleets.”
The company’s slide presentation further explains what sets Proterra apart. Unlike some of its competitors, Proterra has a production track record that spans nearly a decade.
Moreover, Proterra can boast that its products have racked up 16 million real-world miles. Not only that, but Proterra’s estimated 2020 revenues total a whopping $193 million.
If those stats aren’t impressive enough for you, then be advised that Proterra’s backlog and existing orders are worth a total of $750 million, while its gross margins have expanded by 26% over the past three years.
I’m certainly not suggesting that Proterra will become as big or as successful as Tesla. Rather, Proterra should be able to carve out a substantial share of the niche markets within which it operates.
The Bottom Line
Clearly, Proterra is ready and able to grab a chunk of the $225 billion global commercial vehicle market.
Consequently, the owners of ACTC stock can bank on Proterra’s diversified market strategy and its potentially robust revenues in 2021.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.