Editor’s Note: This article is part of Joanna’s Top Trades — a weekly feature dedicated toward making you money within a specific space. Joanna’s pick for this week is Levere Holdings (NASDAQ:LVRA) as the top automotive stock to trade this week.
Let’s face it: shares of Electric Vehicle (EV) makers Lucid Motors (NASDAQ:LCID) and Tesla (NASDAQ:TSLA) have been stuck in neutral lately. The former (which I’m selling) is dealing with the overhang of lock-up expirations; the latter (which I’m buying), is dealing with a safety probe. For anyone actually working the numbers, here’s an update on my EV pair trade.
But investors looking for a new and exciting EV stock with near-term catalysts don’t need to sit idly by. In fact, for anyone looking for the next big electric thing, I have an idea for you: Levere Holdings. This pre-merger SPAC (Special Purpose Acquisition Company) is still under the radar for most retail investors, trading just below its $10 NAV (Net Asset Value). But LVRA could become a household EV name sooner than you think: rumor has it that Levere is eyeing Bugatti-Rimac as a merger target.
If the speculation plays out, Levere would be the first publicly-traded electric hypercar stock.
Hypercars are steamy. They’re also speculative (but then, so was CCIV/LCID).
Still, trading below NAV, LVRA is a fairly low-risk arbitrage opportunity with potential upside as the blank-check company comes closer to identifying a SPAC target. If short-term trading is your thing, here’s a closer look at why you should buy LVRA stock now.
While LCID Stock Grinds Gears, LVRA Looks Ready to Race
Levere, which went public in March of this year, offers scant public details (for now). But at first glance, there’s an obvious similarity between Levere and its EV-focused predecessor, Churchill Capital IV: a merger target “with a presence in EMEA, with high potential for EMEA entrance or would benefit from being deployed in EMEA to then expand to different regions.”
Adding to the familiarity is Levere’s strong track record in the EV space. The company is led by the cofounders of the Euro-based mobility startup Goggo Network. Also at the helm are CFO and CIO Stefan Krause, who currently serves as the COO of Fisker (NYSE:FSR) and previously founded Canoo (NASDAQ:GOEV), two other notable electric vehicle makers that went public via SPACs (remember Krause; we’ll come back to him a bit later).
Another Category Killer Is Born: Rimac-Bugatti and All-Electric Hypercars
LVRA and LCID share a common focus on EVs and EMEA. But there’s another way they’re alike: both are EV category killers. Where Lucid defined “post luxury,” the theory goes, LVRA could define “all-electric hypercars.” That is, if LVRA makes Bugatti-Rimac its merger target.
Bugatti-Rimac, for the fast car enthusiasts among us, was born from the July spin off of Bugatti from Volkswagen (OTCMKTS:VWAGY). CEO Mate Rimac says he’s “f@#%#$ crazy” for propelling the 112-year old Bugatti into an electric future. French carmaker Bugatti, which boasts Cristiano Ronaldo and Jay Leno as customers, makes the world’s most expensive car (80 of them, to be more precise). For $3.6 million, you can take home the 1,480-horsepower Chiron Pur Sport, which, in addition to being expensive, also boasts the worst fuel economy of any car made last year.
However much credibility you ascribe to a LVRA combination, there’s one thing we can agree on: the new Bugatti-Rimac will be one to watch.
As a public entity, Bugatti-Rimac would be a the first pure-play electric hypercar stock and an investment alternative to Tesla, whose $130,000 Model S Plaid can accelerate from zero to sixty miles per hour in less than two seconds. (For the record, Rimac was already said to be planning a 2022 IPO). The company plans to deliver two all-new Bugatti models engineered by Rimac by 2030. First up, a 2000-horsepower hybrid hypercar with a naturally aspirated combustion engine; next, Bugatti’s first full EV (for more on fast cars, check out my Fireside Chat with Mark Frohnmayer, CEO of electric carmaker Arcimoto (NASDAQ:FUV)).
LVRA Stock: A Discounted Pre-merger SPAC with Optionality
Admit it: an electric hypercar stock would be amazing. And adding fuel to the LVRA fire is a recent interview between Rimac’s friend and advisor Vitaly M. Golomb and Stefan Krause of Levere. Both also work for investment banking firm Drake Star Partners.
The bottom line on LVRA stock is right now, the deal speculation is purely that: speculative. Still, if you can scoop up LVRA shares on the discount, I’d say it’s worth a gamble.
Reader Question of the Week: Lidar Skepticism
From the article “Tesla Cars Are Crashing. But These Lidar Stocks are Ready to Race:”
I have a question, do you drive your car using lasers? Did you watch AI day? Have you spent any time following what Tesla is working on and Elon’s views on Lidar, and it’s shortcomings? I do believe they will solve autonomy first, without Lidar.
Of course not! In the same way that I don’t close my eyes and hit Autopilot. I for one will always use my eyes, until they fail me.
But the people want automation.
For Elon Musk, lidar has no place at a company whose vision is to create a “synthetic animal.” Musk described Tesla as a company with “deep AI (Artificial Intelligence) activity in hardware on the inference level and on the training level” that can be used down the line for applications beyond self-driving cars. (like say, humanoid robots).
In real life, without the superhuman distance-measuring ability of lidar, we humans figure out the distance to remote objects by being smart. We know roughly how big a person is in relation to a car. We know the smaller a car or person looks to us, the further away it is. We guess distance from how things move relative to one another as we move.
Deep neural networks can also do that.
Stay tuned for more AI coverage.
Your comments and feedback are always welcome. Let’s continue the discussion. Email me at email@example.com.
Disclosure: On the date of publication, Joanna Makris did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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