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Blank Check Companies Chase EV Makers

Image via Viacheslav Bublyk on Unsplash

Tesla is the epitome of a cult stock. The electric vehicle maker, which is now the most valuable automaker in the world, has defied conventional wisdom for years.

Despite CEO Elon Musk's countless examples of questionable behavior, the fact it loses money and produces a fraction of the number of cars as larger automakers or the detailed research from the TSLAQ community, shares of Tesla have continued to defy all logic and march higher.

Part of what gives Tesla such a cult following is by selling its vision of the futureconsistently providing excitement over ideas such as fully autonomous driving, the Cybertruck or the Tesla Semi. To Tesla's credit, this strategy has worked and up to this point proven some of the world's most well-known investors wrong.

What Tesla has also done is inspire other electric vehicle makers to follow the same playbook of creating a buzz on Wall Street by hyping up their products.

We saw this last month when privately-held hybrid truck maker Nikola Corporation went public through a reverse merger with VectoIQ, which was a publicly-traded special purpose acquisition company.

Nikola, which went public on June 4, became more valuable than Ford after just four trading days despite not expecting to generate any revenue until 2021. The company said preorders for its trucks represent more than $10 billion in revenue.

Similar to Tesla, Nikola has mastered the ability to hype up products that aren't yet available through appealing graphics and a list of cool features. Also like Tesla, Nikola has a CEOTrevor Milton, who isn't shy about using social media to hype up his company while also speaking out against detractors. For example, Milton lashed out about a Bloomberg report saying the Nikola One semi that was unveiled in 2016 wasn't drivable as it didn't even have any fuel cells in it.

"This is sad. @EdLudlow should be let go. He will never set foot in my building or events Nikola puts on," Milton tweeted. "No one in Bloomberg either .His editor was even on the phone to hear my responses. Release the whole interview since it."

Milton continued, saying "I don't back down and happy to take this fight on. The funny part is, he won't hurt me. He hurt himself for this hack job of an article. There were no 'gears and motors missing' you jackjob. They were sitting on the tables to show the audience."

With Tesla having made new all-time highs earlier this week, as well as Nikola still trading at a market capitalization of more than $20 billion, electric vehicle maker Fisker apparently determined "Why not us, also?"

Fisker is reportedly discussing going public via a sale to a blank-check acquisition company similar to the method Nikola used to go public. Spartan Energy Acquisition is reportedly leading a bidding war for Fisker in a deal that could be announced as early as next week for $2 billion. Shares of Spartan Energy Acquisition jumped on the news as shares rose by as much as 35% yesterday.

Fisker marks Henrik Fisker's second attempt at an electric vehicle company as his previous company, Fisker Automotive, filed for bankruptcy in 2013 after making less than 2,000 vehicles. Fisker plans to sell the Fisker Ocean luxury electric SUV beginning in 2022 for $37,500.

While investors in these companies have had the last laugh at the expense of those who bet against them, we wonder how much longer the hype can continue before reality begins to set in.

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