Stocks that went public through mergers with special-purpose acquisition companies have been crushed in 2022. There is always an exception, though.
Start-up
FREYR
Battery (ticker: FREY) is a SPAC-related stock that is doing just fine. Better than fine, actually. Coming into Monday trading, shares are up about 23% year to date. Shares are down in Monday morning trading after the battery start-up reported a bigger third-quarter loss than expected. But Investors also care about things other than the bottom line.
FREYR on Monday morning reported a third-quarter loss of 80 cents per share. The company doesn’t have sales yet, and is still validating its technology and building battery capacity. It is focusing on producing rechargeable lithium-ion batteries for the electric vehicle and energy-storage markets.
Wall Street was looking for a loss of 30 cents per share. The biggest part of the loss, however, was an adjustment to stock-warrant valuation that depends on factors such as the stock price.
Shares were down about 1% in Monday morning trading. The
S&P 500
and the
Nasdaq Composite
are down about 0.5% and flat, respectively.
FREYR ended the quarter with about $420 million in cash on its balance sheet. The company has used around $155 million so far this year to build its business.
Business development matters more than earnings right now. Over the past few weeks, the company announced a location for a U.S. battery plant, signed sales agreements for its batteries, and announced partnerships for materials procurement, among other things.
“We are excited with the progress FREYR demonstrated to support our industrialization plan during and subsequent to the third quarter, which included the start of our Giga America project development,” said CEO Tom Einar Jensen in the company’s news release. “With the selection and purchase of the Giga America site now concluded, FREYR is moving rapidly and decisively to advance our strategic goal to become an industrialization partner of choice in the clean battery space on both sides of the Atlantic.”
Giga is a prefix—popularized by
Tesla
(TSLA)—that the battery and EV industry has adopted for naming manufacturing facilities.
Investors have approved all the activity. FREYR stock is up roughly 5% over the past month, and up more than 80% over the past six months.
That’s very different from most other SPAC-related stocks. Battery technology start-up
QuantumScape
(QS) is off about 35% over the past six months. Shares of EV and autonomous-driving start-ups
Lordstown Motors
(RIDE) and
Luminar Technologies
(LAZR) are down about 20% and 15%, respectively, over the same span.
Shares of the Defiance Next Gen SPAC Derived exchange-traded fund were down more than 30% year to date before that ETF liquidated in September. Investors just didn’t want SPAC exposure any more.
Wall Street, along with the deals signed by the company, deserves some of the credit for shares preforming well. FREYR shares are popular on Wall Street. Six analysts cover FREYR stock, and all rate shares at Buy. The average analyst price target is $21. FREYR stock closed at $13.79 on Friday.
SPAC-related stocks have struggled amid rising interest rates, low sales and FREYR seems to be the exception that’s getting more mileage than its peers.
Write to Al Root at allen.root@dowjones.com
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