Electric Vehicles Are The Future
I think it is unlikely that electric vehicles will ever account for 100% of the market but it is assured the market for EV, and market share, will continue to grow. At only 2.6% of the world’s auto fleet and 2.4% of sales (2019 figures), there is quite a bit of room to grow. Tesla (NASDAQ:TSLA) is only the most visible EV car manufacturer, not the only EV market or even the best positioned. When it comes to sales Tesla is churning out the most on a global basis but GM (NYSE:GM) leads sales in China and is on track to dominate the U.S., too, if the Nikola (NASDAQ:NKLA) deal pans out. What I’m getting at is three are more ways than one to gain exposure to this multi-billion dollar growth opportunity.
Attack of The SPACs, EV Companies Are Coming To Market
Nikola grabbed the market’s attention for more reasons than one when it went public. Instead of taking the traditional IPO route, the company chose to use a SPAC. A SPAC is a Special Purpose Acquisition Company formed with the intent of buying specific assets. In essence, a SPAC is an SEC-approved shell company with no operations and specific purpose. It becomes a “real” corporation upon purchase of operational assets which in this case are EV manufacturers. This is important because not one but three other EV makers are on track to SPAC this year.
Lordstown Motors (RIDE) Part Of GMs EV Strategy
Lordstown Motors is an Ohio-based EV startup with a full-sized dual-cabin pickup truck in production. The company, interestingly, is headquartered in GMs old Lordstown plant and part of GMs EV strategy. The company announced its plans to go public a few months ago and will trade under the ticker symbol (RIDE). The deal values the company at $1.6 billion dollars and includes $675 of production capital. Lordstown Motors expects to begin production sometime in 2021. The merger is with DiamondPeak Holding Company (OTCMKTS:DPHCU) and is expected to close in the 4th quarter of 2020. GM’s stake is worth $75 and makes a nice compliment to its deal with Nikola.
Fisker Is The Luxury End Of The EV Car Market
Fisker Inc. is a U.S. based EV manufacturer of luxury vehicles. It is a re-launch of former Fisker Automotive which failed in 2014 due to issues with a battery supplier. The company is developing a passenger sedan with a 400-mile range as well as solutions for mass-market and public transportation. The mass-market Ocean model has been called the world’s greenest car. The company is working on a deal with Apollo Management Group to merge with Spartan Energy (NASDAQ:SPAQ). The deal values the company at over $2.5 billion and is expected to close in the 4th quarter. Proceeds from the deal are expected to bring the Ocean model to production in early 2022.
Canoo Is Going With The Flow
Canoo (CNOO) will be the 4th EV company to go public via SPAC this year. The company is trying to innovate not only the EV market but the entire car market with its subscription service. The company is not selling its cars its selling a lifestyle. Members, once approved, pay a flat monthly fee and drive the car worry-free. The membership includes registration, maintenance, charging, and even access to insurance. Canoo intends to go public in the 4th quarter via a merger with the Hennesey Capital Acquisition Company (NASDAQ:HCAC). The deal values the company at roughly $2.4 billion, the first model is expected to go into production in 2022.
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7 Tech Stocks To Buy On Sale
This too shall pass. Those four words should be taped to the computer screen of every investor. If you own shares of the tech sector, you’ve seen your portfolio take quite a hit. Tech stocks were largely immune from the effects of the pandemic.
However, as investors are looking to rebalance their portfolios, tech stocks were obvious targets for some profit-taking. And at the end of the day, that’s what I believe the latest tech selloff amounts to. Stocks don’t move in one direction all the time. Sure, there may be some saber-rattling about breaking up big tech. But with an election in less than two months, nobody will have the political will to do anything.
That doesn’t mean that it’s all going to be smooth sailing. Sure, the Federal Reserve did its part by promising low-interest rates until the end of time (or at least through 2023 whatever comes first). But the rest of 2020 is likely to be volatile for stocks.
First, there’s still the novel coronavirus hanging around. It’s not going to simply disappear after election day. That will take some combination of a vaccine and/or therapeutic. And all the likely candidates seem to be getting farther away the deeper into clinical trials they get.
And we have an election. But we are not likely to know the winner of the election on election night. In fact, for those who remember the spectacle of “hanging chads”, this election could make that one look like amateur hour.
The bottom line is there will be uncertainty. But there are always gains to be found, particularly now that their stock price has come down a little bit. Here are seven tech stocks that you can look to add or increase a position in now that they’re trading at a discount.
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