TPG Pace Beneficial Could See Further Growth

In December, TPG Pace Beneficial Corp. (NYSE:TPGY), a special purpose acquisition company, announced an upcoming reverse merger with the French electric vehicle charging business EVBox. Since then, TPGY stock is up about 110%.

Depth of field shot of an electric vehicle being charged.
Source: Shutterstock

The EV battery market is expected to grow nearly 250% from 2019 to 2026. The worldwide market is expected to reach almost $100 billion in the next five years. These impressive metrics have also caught the attention of Wall Street. In fact, 2020 became the year when SPACs in alternative energy space made headlines regularly.

Investing in charging groups is another way to gain exposure to the fast-growing electric vehicle market. Today’s article, therefore, focuses on what investors could expect from TPGY stock in the coming weeks. Following the reverse merger with EVBox, TPGY stock could become a disruptor in the EV charging space, especially in Europe.

Therefore, potential investors could consider buying into the declines in the share price.

EVBox Is Growing

Metrics from McKinsey show that EV sales rose 44% in Europe in 2019, reaching 590,000 units. EV growth in the first quarter of 2020 was 25%, McKinsey says.

The growth in Europe has an appeal for U.S. investors, too. Currently, EVBox is Europe’s largest electric vehicle charging business. However, its operations extend to 70 countries, where it has about 200,000 charging points. This merger is likely to provide the tailwind for expansion in North America, especially thanks to the influx of cash following the closing of the deal.

EVBox offers residential, commercial and public smart-charging hardware. Analysts also like its cloud-based software solutions. It operates the Everon EV charging app, which enables drivers to find and pay for charging stations in the vicinity. Current revenue stands close to $100 million.

We could compare the operations of EVBox to ChargePoint in the U.S., another private company that is about to merge with Switchback Energy Acquisition (NYSE:SBE). Blink Charging (NASDAQ:BLNK) is the other name to watch in the charging space.

The transaction between TPGY stock and EVBox should close in the coming weeks. With the reverse merger, the enterprise value of EVBox will be around $1 billion. The combined entity will be renamed EVBox Group. ENGIE New Business, EVBox’s parent company, will have 40% ownership in the new business.

“We’ve been closely following this sector and have come to appreciate that charging solutions in Europe are several years ahead of the U.S. and poised to experience explosive growth from the green initiatives of governments, major corporations, automotive OEMs and consumers, alike,” said Michael MacDougall, president of TPG Pace Beneficial. Needless to say, MacDougall’s words sound exciting.

The Bottom Line on TPGY Stock

Following the merger, TPGY stock could be a viable way for investors to invest in the EV opportunity in Europe. In the long run, it could become a high-growth name powering investor portfolios. However, as the past year has shown SPACs are not always easy to value. At present, there is a lot of hype surrounding going public with blank check companies. Similar euphoria exists in the alternative energy space, too.

Therefore, short-term headwinds could easily put pressure on TPGY stock. Given the recent increase in the share price, a potential drop toward $17.50 could improve the margin of safety.

Finally, if you do not prefer to invest in only one company, but want to benefit from the EV the trend, you could consider an exchange-traded fund (ETF) that provides exposure to EVs and EV components (EVC). Examples include the Global X Autonomous & Electric Vehicles (NASDAQ:DRIV), the Global X Lithium & Battery Technology ETF (NYSEARCA:LIT), or the iShares Self-Driving EV and Tech ETF (NYSEARCA:IDRV). 

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. 

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