Are you out there for a low-priced inventory with multi-bagger potential? Think about electrical car (EV) techniques up-and-comer REE Automotive (NASDAQ:REE). It’s a dangerous proposition, I’ll concede, as REE inventory isn’t doing notably effectively in 2021 — however it simply would possibly repay.
To offer you a fast primer, REE Automotive doesn’t truly manufacture vehicles. Reasonably, the corporate makes REEBoard, a modular system used to carry the battery and different elements.
Moreover, the corporate makes REEcorner: a system designed to carry powertrains, steering and braking inside a wheel effectively. It’s additionally essential to know that REE Automotive is a product of a particular goal acquisition firm (SPAC) merger.
As we’ll see, some merchants have been placing damaging worth strain on the inventory. When you’re keen to take an opportunity on a potential hidden gem within the EV market, although, then let’s see what’s below the hood of REE Automotive.
REE Automotive shares began buying and selling on the Nasdaq Alternate on July 23. This occurred after a SPAC merger with the ambitiously named 10X Capital Enterprise Acquisition Corp.
The implied hope of 10x features, nonetheless, aren’t panning out up to now.
As is frequent for pre-SPAC shares, the share worth began out close to $10. However REE inventory was destined for considerably lower cost factors. By the final day of August, the share worth had fallen to $6. Then, as of mid-September, the inventory was hovering close to $5.50.
What occurred right here? A contributing issue could possibly be the market’s normal weariness about SPAC shares and electrical car trade shares.
Nevertheless, there could possibly be a critical cut price proper in entrance of us now. Don’t assume that the dropping share worth of REE inventory means the corporate isn’t making important progress in a number of areas.
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A Grant for EV Development
If something can increase a start-up’s future prospects, it’s a authorities green-light. And talking of inexperienced, REE Automotive obtained a pleasant capital infusion to the tune of $17 million from the U.Ok. authorities not too long ago.
This funding was half of a bigger $57 million funding coordinated by means of the Superior Propulsion Centre.
Apparently, the bigger goal of the funding is to speed up the U.Ok.’s transfer to zero-emission automobiles whereas de-carbonizing the nation’s transport networks. This needs to be good for the atmosphere — and nice for REE Automotive.
As COO Mike Charlton noticed, the funding enhances REE Automotive’s already appreciable dedication to the U.Ok., within the type of a probably essential know-how hub within the nation:
“With the opening of our Engineering Heart within the UK in February this yr, this reaffirms our dedication to the area and is in step with our plans for the mass manufacturing of our breakthrough REEcorner and electrical car platform know-how.”
REE Inventory Has Ahead Momentum
What Charlton is referring to is the Engineering Heart of Excellence. This was established within the U.Ok. to industrialize the corporate’s merchandise and manufacturing with “state-of-the-art testing and engineering gear.”
Together with that, REE Automotive marked quite a few occasions in current months — all of which point out the corporate’s ahead momentum.
For instance, the corporate reaffirmed its progress by creating and presenting 5 REEcorner structure designs. The brand new tech is suitable with automobiles in courses one by means of six.
Additionally, throughout 2021’s first half, REE Automotive obtained 5 patent grants and filed 26 new patent functions. On the fiscal entrance, the corporate reported having about $300 million in money as of July 22.
Furthermore, REE Automotive selected Austin, Texas as the positioning of its U.S. Integration Heart. This facility ought to have an annual capability of 40,000 modular electrical car platforms. The brand new location and elevated manufacturing will assist REE Automotive’s targets for 2023.
REE Automotive Is a Dangerous Wager That May Repay
All in all, there are fairly a number of encouraging developments taking place at REE Automotive. But the inventory has disenchanted the corporate’s buyers up to now.
Granted, there’s danger concerned if you’re holding post-SPAC electrical car shares. Within the case of REE Automotive, although, the rewards might vastly outweigh the dangers in due time.
On the date of publication, David Moadel didn’t have (both straight or not directly) any positions within the securities talked about on this article. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Tips.
David Moadel has supplied compelling content material – and crossed the occasional line – on behalf of Crush the Road, Market Realist, TalkMarkets, Finom Group, Benzinga, and (in fact) InvestorPlace.com. He additionally serves because the chief analyst and market researcher for Portfolio Wealth World and hosts the favored monetary YouTube channel Wanting on the Markets.