Before 2020, SPACs, or Special Purpose Acquisition Companies, were considered to be high-risk investments due to a lack of financial history and a variety of challenges that the companies face to comply with the SEC after they start trading.
However, we have seen a lot of renewed interest in SPACs or “blank check companies” this year as more businesses forego the traditional IPO process to publicly list their companies. Many of these stocks are performing well in today’s market and are even being spared some of the recent market downside since they are not part of any major indices.
Buying SPACs can be a risky endeavor, but some of these businesses might end up being great buys in a few years. That’s why we’ve put together a list of 3 SPAC stocks for investors to watch in the coming weeks. Each one of these stocks has a unique business model and solid growth potential going forward. Let’s take a more detailed look below.
Workhorse Group
The Electric Vehicle market has been extremely hot this year and the hype sent this SPAC stock up over 800% year-to-date. Workhorse Group (NASDAQ:WKHS) is a company that manufactures electric delivery and utility vehicles. It makes sense that major utility and transportation companies would be interested in replacing some of their older vehicles with more cost-efficient and environmentally-friendly electric trucks, which is part of why Workhorse Group is appealing to investors.
I mentioned back in August that this company could see some upside if it wins a contract to provide the U.S. Postal Service with electric trucks. It seems like investors are already banking on the deal going through as Workhorse is one of the three remaining finalists, which means that its hard to justify adding shares of the stock at its current price. With that said, this is certainly a stock to watch in the coming weeks and could be one of the next EV companies to take off. Just remember that Workhorse has a long road ahead towards profitability and an outrageous $3 billion market cap valuation on $92,000 in Q2 sales.
Opendoor
This one is interesting as it’s a SPAC filed by venture capitalist Chamath Palihapitiya, the former vice president of Facebook (NASDAQ:FB) and current CEO of Social Capital. Mr. Palihapitiya has already seen success with his first SPAC which brought Virgin Galactic (NYSE:SPCE) onto the market last year. Now, it looks like he is gearing up for another high-profile SPAC. This stock is currently still a shell company and trades as Social Capital Hedosophia Holdings II Corp (NYSE:IPOB), but investors should be interested in what it will become after its upcoming merger is completed.
The plan is to bring burgeoning real-estate startup company Opendoor (IPOB) public with this SPAC. The current post-merger value of Opendoor is $4.8 billion, which would make it one of the largest SPAC deals of the year. Opendoor is a company that helps people quickly and conveniently buy and sell homes with its user-friendly online platform. Opendoor also provides mortgage products, home repairs, and warranties for homeowners to purchase. The company states it has sold over $10 billion worth of properties since its founding in 2014 and sold 18,000 homes last year. During a time when people are looking to buy houses without putting their health at risk, Opendoor could be a massive success. Keep an eye on this SPAC in the coming weeks as we receive more clarity on when the merger will be completed.
Kensington Capital
Another SPAC that has been getting some attention recently is Kensington Capital (NYSE:KCAC). The company is currently working through a reverse merger with QuantumScape and could be worth a look in the coming weeks. As with most SPACs, the stock soared after the announcement of the reverse-merger. That makes it a pricey stock to invest in at this time since it is up considerably since the merger was announced. With that said, investors should monitor this SPAC going forward because QuantumScape is a company with massive potential.
QuantumScape builds SSBs or Solid-State Batteries. These are batteries that could change the way that electric vehicles are powered by improving problem areas with current lithium-ion battery technology such as charge time, range, cost, and safety. While the company still has a long way to go towards getting its batteries into actual cars, the CEO has stated that testing is going well and we could see them in electric cars by 2025. QuantumScape is partnered with Volkswagen (DE:VOWG_p) and also counts Bill Gates among its early investors. This SPAC could end up transforming the EV market with its revolutionary batteries, which is why it’s a SPAC worth watching in the coming weeks.