When it comes to special purpose acquisition companies or SPACs, investors must separate the best from the rest. And since there are so many SPACs out there, it’s understanding if you want to know what makes Apex Technology Acquisition (NASDAQ:APXT) stock different.
The thing to remember is, SPAC stocks aren’t just for gamblers. If the merger target offers strong value, you might be looking at a worthy long-term investment.
In the case of Apex Technology Acquisition, the merger target has been revealed. However, the merger deal hasn’t been finalized yet. So, profitably investing in Apex Technology Acquisition might require some patience and foresight.
Nevertheless, you might be convinced to accumulate some shares after learning about the acquisition target’s connection to a well-known giant in the tech field.
A Closer Look at APXT Stock
SPAC stocks often have a tendency to cling to the $10 area for extended periods of time. That’s because the markets are waiting to find out which company will be the SPAC merger target.
Thus, for many consecutive months in 2020, APXT stock hovered near $10. Yet, a nice surprise came in late November as the share price shot up to $15 for a quick 50% gain.
And that wasn’t even the end of the rally. The bullish momentum continued, with the share price reaching a 52-week high of $17.90 on Jan. 14.
However, that run-up was followed by a cooling-off period. The APXT stock price declined in February and March, and now is just over $11.
Does this mean that there’s something wrong with Apex Technology Acquisition, or is this a buying opportunity? After we explore the SPAC merger, you might find that there’s a major bargain worth pursuing here.
The Big Announcement
On Nov. 23, it was announced that Apex Technology Acquisition would enter into a business combination with data migration company AvePoint.
As I alluded to earlier, this business combination hasn’t been finalized yet. Once the transaction closes, however, the combined company will be named AvePoint and will trade on the Nasdaq Exchange under the ticker symbol AVPT.
So, now you know exactly what caused the APXT stock price to shoot up so quickly in November.
Plus, we can begin to understand why the share price declined after that. The investing community isn’t known for being patient.
Market traders were probably hoping for the transaction to close promptly. Lately, it seems that the shareholders have expressed their disappointment that the business combination hasn’t progressed quickly.
Personally, I feel that there’s no need to lose patience with Apex Technology Acquisition and AvePoint. As we’ll explore now, AvePoint is a valuable company and therefore, the merger’s closing will be worth waiting for.
A Powerful Partner
AvePoint has played a significant role in data migration to Microsoft’s cloud platforms, while also assisting with Microsoft’s migration projects for SharePoint, Microsoft Teams and other products.
Obviously, having Microsoft as a client is a strong selling point for AvePoint, and therefore for APXT/AVPT stock.
The accompanying press release reminds us that having Microsoft as a partner can turn a relatively small company into a power player:
AvePoint has grown to serve the largest software-as-a-service (“SaaS”) userbase in the Microsoft 365 ecosystem with more than 7 million cloud users as of September 30, 2020 and an estimated addressable market of $33 billion by 2022 according to IDC.
And by the way, AvePoint’s full-fiscal-year 2020 results were recently released, and the data should impress even the staunchest skeptics:
- $151.5 million in total revenues, up 31% year over year
- Recurring revenues of $114.5 million, marking a year-over-year increase of 37%
- Subscription revenues totaling $91 million, an increase of 66% from last year
- Operating cash flow of $19.1 million, a company record
The Bottom Line
Investors just need to be patient and hold on to their APXT/AVPT stock shares.
SPAC business combinations take time. And given AvePoint’s valuable connection with Microsoft, it’s safe to say that investors’ patience will pay off.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.