Why Is Allego (ALLG) Stock Up Today?

Retail investors are taking interest in European electric vehicle (EV) charging company Allego (NYSE:ALLG) today following its special purpose acquisition (SPAC) merger and a new 8K filing. Indeed, ALLG stock is up 142% at the time of writing, just six days after changing its trading ticker.

An image of an EV plugged in and charging, with blue light wisps flowing outward from the plug
Source: Blue Planet Studio / Shutterstock

So, what exactly is going on with ALLG stock today?

Allego is an EV startup with plans to enhance charging infrastructure for EV owners. Founded in 2013, the company currently has more than 26,000 charging stations across Europe. It began trading on the New York Stock Exchange just last week via SPAC Spartan Acquisition.

Since its merger, Allego has traded between $5.66 and $23.91. Despite closing yesterday down 4%, Allego has experienced a massive jump in both price and trading volume today. ALLG’s trading volume at the time of writing is approaching 50 million shares, compared to its average volume of roughly 2.3 million.

Today’s trading volume and price jump seem to be largely in reaction to an 8K filed with the U.S. Securities and Exchange Commission yesterday. Let’s take a closer look.

ALLG Stock Soars on Redemption Rate Revelation

The Netherlands-based company has attracted the interest of a number of retail investors on social media. This is likely due to a new 8K filing filed by Spartan Acquisition, which disclosed the 98% redemption rate that Spartan experienced at the merger vote.

SPAC investors typically have the option to simply redeem their current ownership in the company for cash instead of converting the shares into the new company. In ALLG’s case, 98% of Spartan owners redeemed the offer rather than have their shares converted to Allego.

As those shares are redeemed, the company’s float size is reduced. Stocks with low float are often associated with more speculation and volatility, and today, ALLG stock is proving no different.

This practice of redeeming shares is becoming common for SPACs as more and more high-profile mergers end up falling post launch. It seems investors are seeing its high redemption rate as a sign the company may be undervalued. Regardless, ALLGO owners are clearly enjoying clear skies today as the clear winner of the markets today.

On the date of publication, Shrey Dua did not hold (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.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

Article printed from InvestorPlace Media, https://investorplace.com/2022/03/why-is-allego-allg-stock-up-today/.

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