Business

XL Fleet EV inventory could possibly be a discount after a clean test merger

CNBC’s Jim Cramer on Friday gave his assessment of XL Fleet, the commercial and municipal fleet electrification supplier that is expected to go public on a blank check next week.

XL Fleet was founded in 2009 to tap into the emerging electric vehicle economy. The goal is a special purpose vehicle (SPAC) called Pivotal Investment, whose shares are undervalued, according to Cramer.

The stock was down 0.3% on Friday, closing at $ 15.32 per share.

“Since Pivotal Investment is trading at $ 15 in the merger of the XL fleet, I think the stock could be a bargain,” said the Mad Money host. “But when it starts flying next week, please don’t try to chase it past $ 20.”

XL Fleet, which makes hybrid and plug-in hybrid powertrains, is the latest in a number of new entrants on SPACs, one of the hottest topics on Wall Street. SPACs were created specifically to raise funds, buy private companies, and go public.

The powertrains manufactured by the company are used to convert traditional gas-powered vehicles into hybrids on the assembly line. Their products are currently used in some Ford, GM and Isuzu fleet trucks.

The plug-in products that XL Fleet supplies for the Ford F-150 reduce CO2 emissions by 33%, according to the company.

XL Fleet plans to have an all-electric system by 2022. It will go public in a year that sees a flurry of companies public via SPAC deals, especially electric vehicle makers and related companies. The company is projected to generate revenue of $ 21 million this year, which is projected to increase to $ 647 million by 2023.

“What really sets XL Fleet apart, however, is that unlike most SPAC electric games, their products are already on the road,” said Cramer. “XL Fleet is a little different in that their short-term forecasts are much larger than what you can see from most of these SPAC names.”

Cramer is concerned about two headwinds the XL fleet is facing. This includes automakers planning to make their own all-electric models, which would reduce the need for XL Fleet’s powertrains. Ford has its own plans to launch electric models of the F-150 and Transit Van in 2022.

Cahs-strapped state and local governments are another headwind for XL Fleet, said Cramer, who fears the coronavirus pandemic could hurt spending on green transportation initiatives.

Meanwhile, the host believes the stock of Pivotal Investments, the acquiring company, offers a buying opportunity.

“I have to tell you, if XL Fleet is anywhere near its 2022 or 2023 projections, and we get clarity on this relationship with Ford and the F-150, this stock is cheap, damn cheap,” Cramer said. “XL Fleet would only trade 3.3 times its forecast for 2023.”

Disclosure: Cramer’s charitable foundation owns shares in Ford.

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