SPAQ Stock: Is a risky investment at this point

SPAQ Stock shares are owned by Spartan Energy Acquisition Corp. This SPAQ Stock was backed Apollo Global Management (NYSE.APO). Spartan initially agreed to a reverse merger with Fisker (a relatively new addition to the electric vehicle (EVs) industry). August 14 was the initial date. This date has been moved to February 14, 2021.

Fisker will be able to raise capital via the merger and get listed on the Big Board via a SPAC once the IPO is completed. Privately held Fisker can merge with Spartan to bypass various hurdles and steps to become public or to sell new shares.

SPAQ Stock are Hot

SPAQ Stock is classified by the Security and Exchange Commission as a blank check company. Its purpose is to “pool funds in order finance a merger/acquisition opportunity within a specified timeframe.” This is because the opportunity has not been identified often.” Recently, they have gained increasing attention as an alternative route to traditional IPO.

SPAQ Stocks are usually formed after two years. The company has two years to identify a potential merger partner and take the stock public. In addition, the company has two year window to select a target company, make an offer to shareholders, and then acquire the company.

The merger announcement usually causes a significant increase in the share price of SPAC. The fate of the stock depends on many factors after the merger is completed.

Reverse mergers with SPACs may not always be successful. Many companies fail to create shareholder value and fall below $10. Others are more successful.

In recent months, several SPAC-listings have been successful such as Nikola (NASDAQ:NKLA), DraftKings and Virgin Galactic. They are all higher than their initial prices. All three are now higher than their opening prices.

Market participants immediately compared SPAQ Stock’s reverse merger to Nikola. Nikola focuses mainly on heavy-duty fuel cells trucks and EVs. NKLA stock rose from $37.55 at the opening on June 4, to $93.99 on June 9, despite Phoenix-based Nikola not having any income from manufacturing or selling vehicles. It is now hovering around $43.

It is impossible to predict whether SPAQ stock will follow a similar path after the IPO closes. There are many similarities between Nikola Fisker and Fisker.

For one, 2020 is the year of electric vehicles and other-fuel energy cars. Every investor is eager to find the next Tesla (NASDAQ TSLA). When there’s good news about TSLA stock it lifts other industry shares. Investor Place’s Matt McCall wrote a detailed article about the hype surrounding EVs, and SPAQ stock. He warns investors, and I agree with him. Nikola and Fisker also share a similarity in that they aren’t yet manufacturing or selling cars. Henrik Fisker, founder of Fisker, is optimistic that the first Fisker Ocean cars will be delivered in late 2022.

Fisker Ocean will be a fully electric SUV that comes with premium features. Fisker Ocean is described by the company as an “all-electric, low-emissions vehicle with vegan interior and recycled materials.”

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