ATIF Holdings has announced that it has invested in Phoenix Motor without disclosing the amount. However, news of the investment is enough to send shares of PEV stock sharply higher today. Phoenix Motor held its initial public offering (IPO) on June 10, raising about $16 million from the share sale.
What Happened With PEV Stock
In a news release, ATIF Holdings, which is a business and financial consulting firm with operations in Asia and North America, said that it has made an investment in Phoenix Motor to deepen its portfolio of technology securities.
“We believe PEV brings a unique value proposition to ATIF and its shareholders. I am happy that ATIF participated alongside the other investors in their IPO and look forward to their continued growth,” said ATIF CEO Jun Liu in the news release.
Founded in 2003, Phoenix Motor designs and builds electric vehicles and EV chargers for the commercial and residential markets in the U.S. As of last December, the company had delivered a total of 104 electric vehicles. These consisted of 91 shuttle buses and 13 delivery trucks. The company is headquartered in Anaheim, California.
Why It Matters
The investment by ATIF Holdings is a vote of confidence for Phoenix Motor after its recent IPO. The IPO was viewed as a bust for the EV company. While backers of the company initially hoped to raise $150 million from the public debut, they ended up revising those expectations to $20 million. In the end, PEV stock ended up raising only $16 million.
PEV stock’s IPO price was $7.50, but the shares began trading at $6.50 and quickly fell below $5. However, the company’s share price jumped 70% higher yesterday and is up another 45% today. This suggests it might be caught in a short squeeze or that investors are pushing the stock up sharply higher following its market debut. News that ATIF Holdings has invested in the company should not be enough to increase Phoenix Motor’s share price this much. That’s especially true given that ATIF did not disclose the amount of the investment.
Phoenix Motor stock is trading at a volatile and seemingly irrational level. Given its disappointing market debut, the company’s stock should not be rising this quickly. Investors should be careful with PEV stock and remember that what goes up can quickly come down.
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.