Back in my day, the electric car was a thing of the future.
It was up there with hover boards and jet packs – something you like to daydream about and draw on construction paper, but nothing you thought would ever be plausible.
And now, here we are… it’s 2020, and electric cars are taking over the automotive industry.
BloombergNEF just reported that electric vehicles will account for 10% of global passenger sales in 2025. That number is expected to jump to 28% in 2030 and 58% in 2040.
Needless to say, this technology is growing… and fast.
Now, we’ve seen how lucrative this business can be. I mean, Tesla just reached the highest market cap in the automotive industry, clocking in at a crisp $281 billion.
So, the assumed answer as to how to play this “electric car extravaganza” is to buy TSLA stock. That could very well be a great long-term play, but TSLA has already left the station. It’s one of the most expensive stocks on the market, trading north of $1,500 per share.
So of course, the $1 million question… what company is “the next TSLA?”
Well, I have the answer. And you can find it right here…
Lordstown Motors: The Next Tesla
The electric vehicle market is about to get red hot, and if you’re not in on the game at this stage, you’re missing out. So the million-dollar question is, “What’s the next stock that is going to payout a windfall?”
And I have the answer right here: Lordstown Motors.
Lordstown is a private company that is in the process of manufacturing electric trucks, like the one you can see below:
The company is led by CEO Steve Burns. And almost everything this guy does is big. He is the former CEO of Workhorse Group Inc. (NASDAQ: WKHS), which developed electric powertrains for UPS delivery trucks. He’s also the inventor of Apple’s Siri.
This guy knows his way around top market movers and is the brains behind the companies’ major products.
But Lordstown’s product is unlike anything we’ve seen before.
The truck boasts 600-horsepower output, top speed of 80 mph (electronically limited), a 7,500-pound towing capacity, and a 250-mile range. A key innovation is in-wheel motors, providing 4-wheel drive and a “mind in each wheel.”
With deliveries scheduled for summer 2021, the “Endurance” model starts at $52,500, and buyers will qualify for a one-time $7,500 tax credit.
The truck hasn’t even been unveiled yet, and demand is already high. Lordstown Motors currently has $1.4 billion in preorders for the Endurance.
Why so much demand for a virtually unknown company? Well, one of its backers is an automotive giant. Back in November 2019, Lordstown purchased a 6.2 million square foot General Motors Co. (NYSE: GM) assembly plant in Lordstown, OH. And with a strong vote of confidence, General Motors has invested $75 million in the venture.
All of the compelling information above makes this company a solid investment prospect.
But you know how I feel about initial public offerings (IPOs). Given that the company hasn’t delivered their first vehicle yet, this investment would be considered speculative and, therefore, risky.
Lordstown hasn’t proven itself yet and could very well fail. That’s why I tend to recommend that you avoid IPOs entirely. Instead, sit on the sidelines and watch how the company plays out before shelling out a bunch of cash first thing.
But historically, the greatest rewards are accompanied by the greatest risks. And this one appears to be poised for great rewards, so I understand the temptation. If you just can’t ignore it, then the next question is this – short of contacting Lordstown Motors and investing directly, how do you profit on this opportunity?
Well, the answer is simple…
Lordstown Motors has begun a special IPO process called a SPAC IPO.
First, an IPO is the process of offering shares of a private company to the public via a new stock issuance. Some refer to the process as “floating” the company. This process provides an influx of capital to the company, but it takes months to complete.
IPOs are tough because some fail while others succeed. Recent successful IPOs include the likes of Beyond Meat Inc. (NASDAQ: BYND), Crowdstrike Holdings Inc. (NASDAQ: CRWD), and Zoom Video Communications Inc. (NASDAQ: ZM).
A Special Acquisition Company (SPAC) is a company with no commercial operations that is formed strictly to raise capital for an IPO with the soul purpose of acquiring an existing company. Also known as “blank check companies”, SPACs are a great and expeditious vehicle for a private company to go public.
Yesterday, SPAC DiamondPeak Holdings Corp. (NASDAQ: DPHC) announced its intentions to merge with Lordstown Motors in a deal that values Lordstown Motors at $1.6 billion. Given the $1.4 billion in pre-sales already on the books, this valuation may very well be low.
The news sent the stock up 47% in two days. Once the merger is complete, the ticker symbol will be changed from “DPHC” to “RIDE.”
And if you find this opportunity compelling, you don’t need to wait until the merger is complete. You can buy shares of DPHC right now and get in months before the actual merger. Of course, the stock has risen a lot over the past few days, and that’s where the speculation comes in.
With months of merger anticipation, the hot electric vehicle market, and the great fundamentals of Lordstown Motors, there could very well be a lot more upside near and long-term.
— Tom Gentile
Source: Power Profit Trades