• Sat. Jun 25th, 2022

SPAC Stock

Special-purpose acquisition company

I remember being outside the King of Prussia mall in 2013 when I saw a green Fisker Karma and I thought it was the coolest thing I had ever seen. At that point Tesla (NASDAQ:TSLA) and Fisker were still in their infancy and I had no idea what was dwelling in the electric vehicle market. I was 22, young, naive and had no idea about the great battle fossil fuel burning cars would endure over the coming decade. All the electric cars I had ever seen before tried their best at being too futuristic looking instead of the sleek, sexy designs of the Tesla Model S or Fisker Karma.

Unfortunately the original Fisker company filed for bankruptcy in 2013 after selling only 2000 cars in North America and a few more in Europe. The company burned through over $1.3Bn in cash and cost the United States taxpayers hundreds of thousands of dollars.

Rumors have been around for years that Henrik Fisker would be back with a vengeance to compete with the Tesla’s of the world and in July 2020, that wish had came back to a reality as Spartan Energy Acquisition (SPAQ) SPAC, backed by Apollo Global Management to IPO the company and go public.

Key Terms of the Fisker Acquisition With Spartan Energy SPAQ Definitive Agreement:

  • Enterprise value of $2.9B
  • $1bn in funding, more specifically $500m from Fisker IPO using PIPE investment at $10/share (Private investment in public equity)
  • Merger to take place sometime between September, October 2020
  • Fund from SPAC will go directly to fund operations beginning 2022
Henrik Fisker, Chairman and CEO of Fisker told other sources: “Today, the realization of the world’s first digital car company took another major step forward, advancing our mission to commercialize the world’s most emotional and sustainable vehicles, while upholding our vision of a clean future for all. We are excited to partner with Apollo, a world-class financial institution who brings deep industry expertise, extensive global relationships and a shared commitment to ESG.”

Upon SPAC merger Fisker plans to get the production line started with use of other company resources and do not plan to open their own factory at this time. Production is expected to start in late 2021/2022 with models being rolled out to customers starting in 2022.

Production will start with the Fisker Ocean, an affordable all-electric SUV estimated to be starting under $40,000 USD. The Ocean is expected to have 250-300 miles per charge and be the most sustainable product on the market, having a vegan car, with seats made from recycled materials.

Fully refundable reservations for the vehicle are starting at $250 USD, but other avenues are being made available with a mobile app, where you can do a monthly lease for $379/month after a $3000 down payment.

Is SPAC Stock SPAQ A Buy & Is It Really A Decent Competitor To Tesla?

The EV market is getting tougher by the day with Tesla currently owning the space and competitors like GM and VW catching up quickly. That said, Fisker is a world renown car designer, having created the BMW Z8 and one of the Aston Martins.

Fisker at a $2.9B valuation it could give you the opportunity to get in on the ground floor of a potentially $10-$15bn or greater car company several years down the road. The future value of the company is hard to determine as of late there is little known about Fisker’s future plans for expansion or additional models to bring to market.

There is obvious risks involved such as the company has already experienced bankruptcy in the past, current competition, not having their own factory initially. But I believe this company will be a better competitor than the likes of NKLA because it has actually sold cars before, compared to NKLA which has never made a car before.

The final verdict for me would be to determine how much capital you want to put at risk, as it could easily as go to $0/share as it could go to $50 or $100/share. A sub-$60k fully electric SUV will do well in the current environment as competition for Model X or Range Rover are all over $70k.

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