What’s the buzz about TPG Pace Beneficial Finance (NYSE:TPGY)? It’s a special purpose acquisition company (SPAC) that’s reverse-merging with EVBox Group, a company in the red-hot electric vehicle sector. That’s exciting, but the hype surrounding TPGY stock had faded lately.
You might be starting to detect a pattern in the markets during the past few months. A number of electric vehicle-related SPAC stocks have popped and then dropped.
There’s definitely a lesson to be learned from this. As I’ve tried to emphasize many times, buying a stock after a parabolic run-up can lead to substantial losses.
But with this harsh lesson there may also be an opportunity. Now that the mania phase has passed, investors can invest in value-added businesses like TPG Pace Beneficial Finance at a reduced price point.
A Closer Look at TPGY Stock
In the days leading up to Dec. 10, 2020, TPGY stock was trading near the $10 level. That’s not unusual for SPAC stocks when a reverse-merger target hasn’t been revealed yet.
The next thing you know, there was a buying frenzy as TPG Pace shares exploded to the $30 level on Dec. 23. Fast-forward a few weeks and on Feb. 9, 2021, the stock hit a 52-week high of $34.28.
At that point, the risk-to-reward profile wasn’t favorable anymore. Thus, TPGY stock started to deflate like a punctured tire.
By May 11, 2021, the stock price had declined to $13.93. So, if you’ve been sitting on the sidelines, you may have a chance to buy some shares at a discount to the peak price.
Expectations, and Disappointment
Here’s the reason why TPGY stock tripled within a few weeks’ time. On Dec. 10 of last year, TPG Pace announced that it planned to combine with EVBox so that company could go public.
So, that’s why the trading community was so excited. At that time, SPAC stocks with an electric vehicle connection were a hot commodity.
EVBox doesn’t make electric vehicles. Rather, the company specializes in manufacturing electric vehicle charging ports, with a focus on the European market.
The press release stated that EVBox would be listed on the New York Stock Exchange late in the first quarter of 2021.
Obviously, that time frame has come and gone. EVBox still isn’t listed on the New York Stock Exchange. Therefore, the trading community is disappointed and is punishing TPGY stock.
On April 28, I urged investors to be patient with this stock. I’m standing by that stance because sometimes in the business world, things don’t happen as promptly as we’d like them to.
In an updated investor presentation, TPG Pace modified the timeline to reflect new developments. So, let’s get into the specifics of that.
A Critical Update
First, TPG Pace revealed, “Assuming that EVBox Group completes its 2020 audit on a U.S. GAAP basis by early May, we expect to close the business combination in June of 2021.”
I didn’t find any specific updates on that audit, but hopefully everything’s going according to plan.
Moreover, “On March 15, 2021, Pace Beneficial and ENGIE Seller amended the Business Combination Agreement (‘BCA’) to allow Pace Beneficial the ability to extend the outside closing date of the BCA from June 8th by 90 days to September 6th.”
If all of this pans out, TPGY stock could turn around and surpass its previous peak price.
Keep in mind, EVBox has a major presence in the global charging station market: 250,000-plus charging ports, 5,000-plus fast-charging ports, 20,000-plus business customers and a presence in 70-plus countries.
And in the investor presentation, EVBox gives the impression that it already has a major presence in Europe and is seeking to expand into the United States.
The Bottom Line
Patience will be the key to success as a TPGY stock investor. The best strategy is simply to hold the shares and wait.
In the meantime, watch for developments in the business combination with EVBox. Any day now, there could be big news and the shareholders could suddenly see their accounts grow.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.