Cenntro Electric (NASDAQ:CENN) stock, which used to trade as Naked Brand, is in the spotlight today after the electric vehicle maker announced it has acquired a majority interest in Tropos Motors Europe (TME).
In a news release, Cenntro Electric said it has acquired a 65% equity stake in TME for 3.25 million euros.
Once the deal is finalized, likely later this month, TME will assemble and distribute the full line of Cenntro Electric’s products for the European market. Why should investors care? The move helps Cenntro Electric establish a foothold and expand within the European market.
What Happened With CENN Stock
There are other details for investors to like about the deal for Cenntro Electric. One key element is that Tropos Motors Europe has a distribution network of 50 dealers in Germany and 13 importers in Europe across 16 countries. For Cenntro, this will enhance its ability to assemble and distribute vehicles. It also provides a much more robust presence on the European continent.
Many are investors are likely familiar with Cenntro, which makes a variety of electric commercial vehicles. It has so far delivered 3,500 vehicles.
Why It Matters
Despite being in the production phase with its electric vehicles, Cenntro Electric and its share price have struggled. Over the last year, CENN stock has fallen 90% to close trading yesterday at $1.45 a share. Year to date, its share price has declined 73%. A rebrand from Naked Brand to Cenntro Electric has done little to improve the company’s fortunes.
The share price decline has been blamed on difficulty securing contracts and poor earnings results. However, CENN stock gained as much as 57% on news of the Tropos Motors Europe acquisition as investors see it as a positive catalyst for the company and a move that could help to bolster Cenntro Electric’s deliveries and sales.
What’s Next for Cenntro Electric
Cenntro Electric moves a leg higher on news of its European expansion. While positive, investors should keep in mind that the company still has to successfully execute on its European strategy and that CENN shares still trade at penny stock valuations.
On the date of publication, Joel Baglole 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.