CIIG Merger (NASDAQ:CIIC) is at an interesting crossroads in the market. On the one hand, EV-related stocks have some serious momentum. So do SPAC offerings and IPOs. As such, CIIC stock has performed pretty well.
Lately the stock has been consolidating its rally from November. That’s when shares went from $10 to $30 in just a couple of weeks. For bulls, the sideways action in the stock price is about as much as they could ask for.
However, this company has a unique fundamental situation, while also finding itself in the midst of a unique market situation.
There’s nothing wrong with being bullish on stocks this year. However, it would be silly to pretend that there aren’t some pockets of euphoria. While I’m an EV bull, let’s not deny that there’s been a lot of enthusiasm in this space over the last six to nine months.
Further, SPACs have also been a point of enthusiasm. So to combine EVs and SPACs creates a likely scenario where we eventually see some of this hot air get taken out of these stocks.
But what makes CIIC stock so special?
A Closer Look at CIIC Stock
CIIC Merger should eventually become Arrival sometime in the first quarter of 2021. When it does, CIIC stock will trade under the ticker symbol “ARVL.”
However, Arrival isn’t your typical automaker. It’s not looking to build electric cars and trucks and take on some of the more established EV manufacturers and traditional automakers. At least, not in the head-to-head sense.
Instead, Arrival has a different approach. It’s going after vans and busses.
Like most of its EVs SPAC peers, Arrival does not currently generate any meaningful revenue or earnings. However, unlike its peers, it may be much closer to doing so.
The company plans to begin production in the fourth quarter of 2021. In other words, just a few quarters from now. Further, it’s already got a few notable investors, including Kia and Hyundai. Another big investor — a large parcel logistics company — also has an order for 10,000 electric vans with an option for more.
In all, Arrival has snagged more than $1 billion worth of orders. However, its revenue aspirations go far beyond that figure.
The company expects to generate $1 billion in revenue in 2022 and $5.1 billion in 2023. 2024 expectations may be a little out there, but the company is looking for $14 billion in sales in 2024.
If Arrival can come anywhere close to that last estimate, CIIC stock should be a massive winner. Simply put, that would be a very impressive revenue number to put up.
The company has another interesting take on production as well, incorporating a “microfactory” approach. Instead of building huge, massive production facilities like most automakers, Arrival aims to have a much smaller production footprint.
This should allow the company to quickly set up its production facilities in existing warehouses in as little as six months. There it can produce vans and busses, cutting down shipping costs as it can operate in multiple regions at once.
Even better, the company believes it can generate a profit even on low production volume thanks to this approach. Finally, Arrival believes it can be cash flow positive in 2023.
Bottom Line on CIIC Merger
So what’s the bottom line here? There are a lot of “ifs” when it comes to CIIC stock. If the company can generate $5 billion in sales in 2023…if it can turn cash flow positive.
However, if some of these “ifs” start to pan out, we are looking at a real opportunity and potentially a high-quality one at that. Should Arrival make its EV products cost-competitive or cheaper than its fossil-fuel competitors, there’s little reason it shouldn’t gain traction.
The fact that it already has some big investors helps. It further helps that some are already willing to place orders.
With that said, don’t be surprised if we get a better opportunity to buy CIIC stock. Shares have been consolidating nicely, but the stock has also been putting in a series of lower highs. Further, the SPAC and EV space has been incredibly hot. It wouldn’t be abnormal to see some volatility in these names, particularly with many having little to no revenue.
While CIIC stock may be one of the higher quality EV SPACs, it won’t be immune to a group-wide dip. Let’s see if we get a better opportunity in this one at some point this year.
On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.