Fisker Backs Up Into Markets
Special Purpose Acquisition Companies (SPACs) are weird investments; shell companies with no real assets. A SPAC lists on a stock exchange to raise funds for a trust, which is invested in safe government bonds until an acquisition target is found for those funds.
The investor in a SPAC earns a yield from the treasuries until the acquisition target is found. Then, shares spike in the conversion process to being made shares of that target. If nothing is found or investors vote against whatever is, the trust is paid back to investors.
Spartan Energy is a SPAC that, like all SPAC’s, has a floor to its stock price of $11. This represents the net asset value of the treasuries. However, Spartan announced a target acquisition last week, and its shares shot up to around $17.
What’s the target? Fisker, the electric vehicle start-up!
If Fisker ‘reverse merges’ to go public via SPAC acquisition, like Nikola and DraftKings before it, there’s no doubt you’ll see it on Fantasy Finance, and if the deal gets cut at $1.6 billion as Reuters reports, that implies shares could reach $34 (pre-hype). There’s a bidding war ongoing for Fisker, but it looks like Spartan has it locked up.
Spartan is backed by Apollo, which has almost three-hundred billion in assets under management and a former Department of Energy board member for expertise.
Fisker’s long-term performance will be another matter. We won’t be seeing Fisker cars on the road any time soon. These are the DeLorean’s of our time. Fisker is pre-revenue, pre-production, and cursed by corporate mess-ups.
The bulls will let all of that slide, given how incredible Nikola and Tesla’s short-term price action has been. Fisker once acquired and given its ticker symbol, could be heading to Gainsville. We’ll soon find out!
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
