Introduction
Buying Special Purpose Acquisition Companies (SPACs) was all the craze in 2020 and 2021. Many supposedly ‘up and coming’ high-growth start-ups took to the trend and excess capital available in the financial markets to get capitalised.
The electric vehicle (EV) industry was no different. Riding on the wave of strong public support in ESG and climate change areas, many EV companies took the path of least resistance to getting funded and listed.
In fact, SPACs are a way many companies can benefit from getting credibility by getting listed on the stock exchanges without jumping through hoops of due diligence and paperwork!
It should come as no surprise to many now that, in hindsight, these ‘shortcut’ approaches taken by these opportunistic companies have unravelled in discredibility and even bankruptcy!
Electric Last Mile Solutions ($ELMS)
Before (2020/2021)
Reached a peak market cap of $1.7bn
Projected $613mm revenue and $15mm in EBITDA by 2022
EBITDA $791mm by 2025
Now (June 2022)
$0 revenue (never generated any revenue)
Filing for Chapter 7 BK Bankruptcy
Nikola Corp ($NKLA)
Before (2020/2021)
Reached a peak market cap of $34bn
Projected $300mm revenue by 2022
Projected $3.2bn revenue by 2024
Now (June 2022)
Currently $2.3bn market cap
Admitted to faking the video of their electric hydrogen truck driving on the road
No meaningful revenue as of Q1 2022
Hyliion Holdings Corp ($HYLN)
Before (2020/2021)
Reached a peak market cap of $8bn
Projected $344mm revenue by 2022 with positive EBITDA
Projected $602mm EBITDA by 2024
Now (June 2022)
Currently $600mm market cap
No revenue as of Q1 2022
Lordstown Motors Corp ($RIDE)
Before (2020/2021)
Reached a peak market cap of $5.3bn
Projected $1.7bn revenue by 2022 with positive EBITDA
Projected $5.8bn revenue by 2024
Now (June 2022)
Currently $350mm market cap
No revenue as of Q1 2022
expected to do -$385mm in EBITDA by 2022
Fisker Inc ($FSR)
Before (2020/2021)
Reached a peak market cap of $9.3bn
Projected $3.3bn revenue with positive free cash flow (FCF) by 2023
Projected $1.9bn FCF by 2025
Now (June 2022)
Not sold a car to date
expected to continue to burn cash for next few years
XL Fleet Corp ($XL)
Before (2020/2021)
Reached a peak market cap of $3.3bn
Projected $281mm revenue by 2022 with positive EBITDA of $31mm
Projected $1.4bn revenue and $308mm EBITDA by 2024
Now (June 2022)
Currently $190mm market cap
Expected to achieve $23mm revenue and -$90mm EBITDA in 2022
Romeo Power ($RMO)
Before (2020/2021)
Reached a peak market cap of $5.8bn
Projected $412mm revenue by 2022
Projected $338mm EBITDA by 2025
Now (June 2022)
Currently $90mm market cap
Expected to achieve $40mm revenue and -$200mm EBITDA in 202
Lion Electric Co ($LEV)
Before (2020/2021)
Reached a peak market cap of $5.5bn
Projected $668mm revenue and $119mm EBITDA by 2022
Projected $3.6bn revenue and $707mm EBITDA by 2024
Now (June 2022)
Currently $925mm market cap
Expected to achieve $185mm revenue and -$50mm EBITDA in 2022
Canoo Inc ($GOEV)
Before (2020/2021)
Reached a peak market cap of $5.3bn
Projected $329mm revenue by 2022
Projected $4.1bn revenue and $964mm EBITDA by 2026
Now (June 2022)
Currently $720mm market cap
No revenue as of Q1 2022
expected to do -$530mm in EBITDA by 2022
Faraday Future Intelligent Electric Inc ($FFIE)
Before (2020/2021)
Reached a peak market cap of $3.9bn
Projected $4bn revenue by 2023
Now (June 2022)
Yet to deliver a single car
expected to do less than $1bn revenue and -$500mm in EBITDA by 2023
Lightning Emotors Inc ($ZEV)
Before (2020/2021)
Reached a peak market cap of $1.3bn
Projected $354mm revenue by 2022
Projected $2bn revenue by 2025
Now (June 2022)
Currently $225mm market cap
expected to do $50mm revenue by 2022
Quantumscape Corp ($QS)
Before (2020/2021)
Reached a peak market cap of $48bn
Projected $6.4bn revenue by 2028
Projected $1.6bn EBITDA by 2028
Now (June 2022)
Currently $4bn market cap
Cash burn in 2021 was twice the estimated amount
Uncertainty exists as to whether their technology will work
Lucid Group Inc ($LCID)
Before (2020/2021)
Reached a peak market cap of $105bn
Projected $2.2bn revenue by 2022
Projected $22.8bn revenue by 2026
Now (June 2022)
Currently $27bn market cap
Cash burn in 2022 much higher than expected
expected to do $1.3bn revenue by 2022
FINAL WORDS
Many famous investors and traders like Carson Block raised significant concerns about SPACs at the height of their peak and warned retail investors that SPACs are, in reality, “a scam” in the stock market.
It is now evident, 1 year on from when SPACs took on the centre stage, that these warnings from seasoned traders and investors have proven correct.
Our community readers should heed that the stock market can be very brutal at times. While listed companies are required to provide certain information to the public by law, the world has not been short of corporate scandals and overselling hype to investors.
In the case of these EV SPACs mentioned in this article, it should be clear that retail investors must be very careful when companies choose to get listed via a ‘path of least resistance’ manner.
The rule of thumb for our community readers should be the more shortcuts public listed companies take, the more scrutiny you as an investor should apply when assessing the fundamentals of such opportunities.
Please note that all the information contained in this newsletter is intended for illustration and educational purposes only. It does not constitute any financial advice/recommendation to buy/sell any investment products or services.
