LiveWire Group (NYSE:LVWR), the electric motorcycle spinoff of Harley Davidson (NYSE:HOG), rose 30% in pre-market trading over the weekend.
The company went public on Sept. 27, completing a merger with AEA-Bridges Impact, a special purpose acquisition company (SPAC). The deal valued LiveWire at $1.77 billion. The market capitalization early today was $1.9 billion.
The SPAC partner’s stock had been falling into the merger, hitting a low of $8.63 per share. LiveWire opened today at $10.17.
Harley Davidson launched its first LiveWire electric motorcycle in 2019. It then decided to spin off the division and take it public to raise capital. Harley Davidson still owns 74% of LiveWire’s shares.
The LiveWire One is the company’s first bike, with a base price of $22,800. On the initial public offering day, the company began taking reservations on the S2 Del Mar, which carries a list price of $17,000.
The deal brings $600 million in cash with it. The SPAC contributed $400 million and Harley Davidson offered $100 million. Kymco Global, a Taiwanese company with $1 billion of sales per year, also contributed a $100 million private investment in public equity (PIPE) investment. The PIPE investments carry a seven-year lockup. Harley Davidson has a contract to make the bikes in a facility in York, Pennsylvania.
Statista estimates electric motorbikes are a $50.3 billion global market that could double by 2030. The high-performance segment, in which LiveWire participates, is growing at 27% per year.
While Harley Davidson is a big name brand in gas-powered cycles, the electric bike market is more crowded. There are Chinese, European and even British makers. Major Japanese brands like Honda (OTCMKTS:HNDAF), Yamaha (OTCMKTS:YAMCF) and Kawasaki (OTCMKTS:KWHIY) are also in the market. There have already been casualties, like Mission and Victory, which went out of business in the 2010s.
What Happens Next for LVWR Stock?
Traders at Stocktwits noted the tradeable float on LVWR is only 900,000 shares, and 750,000 moved in the pre-market. Options are positive, but the weekend move doesn’t bring LVWR back to its opening price.
While the short-term stock outlook is bullish, this is an American name in a mostly Asian market. LiveWire is selling recreation in a market where commuting and utility dominate.
On the date of publication, Dana Blankenhorn 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.