Lordstown Motors a privately held electrical lorry making company, that recently announced that it will combine with the publically held blank check company SPAC business called DiamondPeak Holdings Corp. Lordstown Motors defined that this merger deal will help them finance their goal of beginning production of their pickup, the Lordstown Stamina, in the latter half of 2021. So this pleads the question that anyone watching this video is likely asking: is DiamondPeak Holdings worth purchasing at $12.39/ share, prior to the merger with Lordstown Motors is finalized?
I begin the video out by speaking about threat versus reward with buying DiamondPeak holdings (DPHC) at the present cost level. If you look at the stock chart given that DiamondPeak went public in March 2019, the most affordable rate level the stock has actually ever traded at was about $9.50/ per share. Before the merger statement last Monday, DiamondPeak Holdings was essentially simply a big pile of publically traded cash. That being stated, now that this blank check company has plans to merge with Lordstown, it is nearly certainly never going back to $9.50/ per share unless the merger offer falls through. So let's just assume that the optimum LIKELY risk for this stock has to do with $2.89/ share, which is the present cost of $12.39/ per share minus the all-time low of $9.50/ per share. Any stock might go to $0/per share but given the truths that DiamondPeak has $284 million in cash, a market capitalization of simply $428 million, and gamechanging news about combining with Lordstown Motors; it is extremely unlikely that this stock will ever sink to $9.50 again. The possible reward is difficult to understand for sure, no one can forecast the future. Nevertheless, we can get an idea about the potential benefit by looking at the charts of the three blank check business that announced they were combining with a private electrical automobile company. So far we had a nice initial pop to $15 for DPHC followed by a quick downturn to the $12 area. This is just speculation however I might easily see Lordstown releasing the smallest piece of bullish news and generating enough hype to bring this stock to $20/share or more in the short-term.
In addition to this exceptional danger versus benefit ratio, I think that Lordstown Motors is among the most legitimate and advanced electric lorry companies to combine with a blank-check company to date. Why do I have more faith in Lordstown Motors than many of the other early-stage EV plays? There are 2 main reasons for me liking Lordstown Motors more than the options. The first is that Lordstown Motors currently has a factory. In November of 2019, Lordstown Motors acquired a 6.2 million square foot assembly plant from General Motors. This home really used to be an assembly plant that General Motors utilized to produce their cars. Given that Lordstown bought the factory in late 2019, Lordstown has actually been concentrating on optimizing the factory to make their electrical pickup, the Lordstown Endurance. According to Lordstown Motors CEO, Steve Burns, the plant that Lordstown acquired from GM really came completely filled with robots, paint cubicles, stamping presses, and other common components for an automobile assembly plant. Steve Burns likewise specifies that he does not see the optimization of the manufacturing equipment as a long-lasting roadblock for two main factors: First, there is a lot of commonness between the robots. Second, Lordstown has actually employed numerous high-end production engineers from Volkswagen, Toyota, Ford, and Tesla. So plainly, this factory purchase accelerated the execution of Lordstown Motor's business strategy by numerous years. Burns states that the production goal for the first year is 20,000 vehicles. It is likewise worth noting that as a result of this SPAC merger offer, General Motors invested $75 million into Lordstown Motors. General Motors clearly sees prospective in Lordstown Motors and thinking about the equity ownership; General Motors has a financial interest in making sure that Lordstown Motors is Lordstown stock successful. The second reason that I like Lordstown Motors more than the majority of the other early phase electrical car companies is because they in fact currently have a significant quantity pre-orders. Lordstown Motors actually currently has 27,0000 preorders, which equates to about $1.4 billion dollars in revenue. Based upon the information that I have actually provided, it really appears as though Lordstown Motors is setup for success here. They have the style of the Lordstown Endurance locked down, they have the factory, and they have a substantial quantity of preorders. Lordstown Motors is much even more along than a number of these other EV startups and I think that this makes the business that they are combining with a much more viable financial investment than many of their competitors.