CLICK HERE to sign up for Hedgeye University FOR FREE
In this clip from The Call @ Hedgeye this morning, our veteran Industrials analyst Jay Van Sciver walks subscribers through the (ridiculous) news that electric truck maker Nikola (NKLA) is acquiring battery pack supplier Romeo Power (RMO) in all-stock deal worth about $144 million.
“These are two bubble SPACs in EVs,” explains Van Sciver. “What’s interesting about this is Romeo has $250 million of book equity and is selling the company for $144 million. They basically IPO’d it at $10/share and are selling it to Nikola for 7% of the IPO. And they’re selling it for stock which is even dumber.”
“This is taking two rocks and tying them tightly together to see if they’ll finally float,” Van Sciver adds. “I suspect they will sink faster. Two kind of fake, money-losing companies aren’t going to combine into something that’s beautiful and make money.”
Hedgeye CEO Keith McCullough offers his take on the news as well.
For info on subscribing to Industrials Pro CLICK HERE
(This clip is a small taste of what our subscribers get each day on The Call @ Hedgeye. In a nutshell, The Call is our morning research call hosted by Hedgeye CEO Keith McCullough with our 40+ analyst research team. It helps small and large investors alike make better decisions via unique and investable stock/sector updates CLICK HERE to learn more.)