Nicola Corporation rang the Nasdaq closed bell from a distance around the world.
Electric vehicle startups, which have been massively launched through SPAC deals over the past year, are increasingly skeptical of their future, and securities regulators are flocking to Wall Street as they scrutinize their books. trying to prove their worth.
Recently, Canoo and Lordstown Motors held private days with investors to showcase their technology and new products as the company’s volatility, Securities and Exchange Commission inquiries, and a significant drop in stocks.
Others have launched advertising or marketing campaigns to attract potential buyers as Wall Street keeps a close eye on vehicle reservations, which is an indicator of future sales. Lucid, who announced the SPAC deal but has yet to make it public, launched a national television campaign in December, while Fisker CEO Henrik Fisker is using social media to make a fuss and promote his company. The famous automaker has even released a new line of Fisker outfits, including $ 30 T-shirts and nearly $ 100 T-shirts.
Companies are among the growing EV start-up groups that will go public or announce plans to do so with SPACs or special purpose acquisition companies. Others include Nicola, Arrival, Faraday Future, Electric Last Mile and many other automotive and technology companies.
Despite this scandal, none of the companies have produced a commercial vehicle for sale, and some, such as Fisker and Canoo, have been out of production for more than a year.
Most deals were initially celebrated by investors, who sent shares through the roof, and made some founders overnight millionaires, even billionaires. But after pressure from the SEC this year, including inspections, warnings to investors and possible changes in accounting guidelines, there has been a wave against most companies.
“I think there will be corrections? Of course. The public market will figure it out,” said Marco Marinucci, partner and CEO of Hella Ventures, which has invested in car companies Wejo and AEye, which announced the SPAC deals. “I think we’re seeing a decrease in appetite at a very early stage right now.”
The Acesparks SPAC 50 index, which tracks the market capitalization of empty check deals before the top 50 largest mergers in the U.S., has fallen about 4 percent year-on-year to date. The post-merger SPACs are getting much worse – the Acesparks SPAC Post Deal Index, which is made up of the largest SPACs that have hit the market and announced targeted acquisitions, has fallen nearly 10% so far this year.
SPAC is a company that produces blank checks, which is used as an alternative to public shares because it raises money to buy something, but does not have its own activities. SPACs are companies that are publicly traded and have no assets other than cash. They are formed only as investment instruments for the purpose of raising funds and then finding and merging a private company. It’s a faster way to publicize a company than a traditional IPO, but some have run into trouble.
At least three SPAC-supported automotive companies – Nicola, Lordstown Motors and Canoo – received requests from the SEC. Each of them fired the founders and CEOs of the companies. The companies said they would cooperate with SEC inquiries.
A prototype of the Endurance truck, which Lordstown Motors Corp will launch in the second half of 2021, will be unveiled on June 25, 2020 at the company’s plant in Lordstown, Ohio, USA.
Lordstown Motors | Acesparks
“I’m glad we’re not organizing a SPAC today,” James Taylor, co-founder and CEO of Electric Last Mile Solutions, told Acesparks’s Squawk Box on Monday. “Obviously there were some challenges in a few SPACs.”
Electric Last Mile in December “Forum Merger III Corp.” agreed to go public through a reverse merger with a vacant inspection company and valued EV at $ 1.4 billion. It began trading in Nasdaq on Monday.
The company also missed its closing date in the first quarter, which was due to Taylor’s SEC review and new accounting guidelines for SPACs. consideration of debts as an obligation instead of capital on their balance sheet.
The SEC is spending significant resources addressing emerging issues in SPACs, new ideas and recommendations around SPAC, and how to properly protect retail investors, SEC Chairman Gary Gensler said in May.
The decline in the SPEC market has been sharp since the increase in SEC participation. According to SPAC Research, 46 companies went public through SPAC deals from April to mid-June. In the first quarter of this year, the average was 100 per month.
“There’s been a bit more realism or practicality lately, which always seems to happen after a company becomes popular,” Morningstar analyst David Whiston told Acesparks. “You had the initial noise, but now that you understand the truth, you have to perform.”
“For many firms like Canoo and Lordstown, the truth has emerged,” Whiston said.
Canoo’s new electric pickup could turn into a campground.
Prove their worth
Canoo and Lordstown, two of the EV startups, faced the biggest declines in 2021. Canoo is down 28 percent, while Lordstown is down 45 percent so far this year. They tracked down Nicholas – the first high-profile car company to go public last June – as a result of SEC inquiries and the ousting of its chairman and founder. Nicola has fallen 47 percent since his debut last June, but has risen 18.4 percent this year.
The new leaders of Canoo and Lordstown held events for investors this month to restore Wall Street confidence. Both companies have fired their founders and CEOs since they went public.
On June 21, 2021, at the Lordstown Motors Assembly Plant in Ohio, workers install door hinges on the shell of an Endurance electric truck prototype body.
Michael Wyland / Acesparks
Lordstaun tours were held last week at its headquarters and plant in Lordstown, Ohio. Part of the tour included an employee who was pre-registered at the company saying “there are real workers in the real factory”.
Canoo held an event with investors a week ago to revive the company’s goals and priorities, including plans to build a new plant in Oklahoma. Tony Akila, CEO of Canoo, who replaced Ulrich Kranz, one of the company’s founders, in April, promised investors that his team would be “big news or news, real news or news” because of his ruthless past. and trying to stay away from competition. .
“It’s better to get out of SPAC puberty early,” he told Acesparks during a video conference. “I was the first to lower the volume to a realistic size. The previous team, no one did anything wrong, they were just euphoric excited.”
Not all EV startups worked badly. Fisker, which went public in October, has grown 115 percent since its first release, including 32 percent in 2021.
– Acesparks Yun Li contributed to this report.