These 2 top-flight SPAC stocks ignored Friday’s market crash

The stock market fell sharply on Friday, as a combination of coronavirus concerns and new regulatory pressures on the nation’s biggest banks weighed on investor sentiment. The Federal Reserve will prevent systemically important banking institutions from repurchasing shares during the third quarter of 2020, and they will have to keep dividends at or below their current level. This added to the nervousness on Wall Street, and the Dow Jones Industrial Average (DJINDICES: ^ DJI), S&P 500 (SNPINDEX: ^ GSPC), and Nasdaq Composite everything fell sharply.

Today’s stock exchange

Index

Percent change

Point change

Dow

(2.84%)

(730)

S&P 500

(2.42%)

(75)

Nasdaq Composite

(2.59%)

(260)

Data source: Yahoo! Finance.

Still, there were some glimmers of hope in the stock market. In particular, the outlook for two ad hoc acquisition companies (SPAC) – Turtle acquisition (NYSE: SHLL) and Graf Industrial – looked brighter than ever, as investors envisioned the potential of these companies using a new way to go public.

The turtle is far from slow

Tortoise Acquisition shares climbed 41% on Friday, adding to last week’s gains. Investors remain excited about PSPC’s choice of a candidate for acquisition, especially in a hot industry environment.

Last week Tortoise announced plans to merge with electric commercial truck company Hyliion. This pushed the SPAC stock up sharply from its previous $ 10 per share, where it has been trading since early 2019. Hyliion’s business model looks a lot like that of the rival electric truck startup. Nicolas (NASDAQ: NKLA), although Hyliion uses a different fuel source for the hybrid versions of its vehicles.

Image source: Hyliion.

Tortoise shareholders are hoping for the same pop that Nikola enjoyed. At less than $ 25 per share, Tortoise is well below the price of $ 63.55 per share that its rival closed today, not to mention the more than $ 90 per share that Nikola’s stock has peaked at. With many people excited about the outlook for electric utility vehicles, Tortoise’s shares are expected to remain volatile for a long time to come.

A rumored deal for Graf

Graf Industrial is also a SPAC and has followed a similar trajectory as Tortoise. Since its IPO in late 2018, the stock has generally stayed around $ 10 per share. More recently, increased interest in PSPCs drove the stock higher, and investors were hopeful that Graf would find a suitable acquisition candidate.

This wait may be over. The company is looking to merge with autonomous vehicle sensor specialist Velodyne Lidar, according to reports from several news sources citing people familiar with the matter. That was enough to push Graf’s shares up nearly 30%, closing at around $ 15 per share.

Velodyne already has big investors around. Car manufacturer Ford (NYSE: F) and Chinese technology company Baidu (NASDAQ: BIDU) are among those who provided funding.

There is some controversy over the value of light sensing and ranging (lidar) as a solution in autonomous driving, with You’re here (NASDAQ: TSLA) CEO Elon Musk has been very critical of the technology. Nonetheless, PSPC investors are happy with the outlook and are hopeful that a deal will be reached.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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