Is Lion Electric Stock A Buy After Its SPAC Merger?

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Lion Electric stock was initially supposed to trade on exchanges after an IPO. Instead, the company has decided to go the SPAC route. That means the stock will have some help getting to the public markets, and it will do so more quickly. On November 30, Lion announced a merger with Northern Genesis Acquisition Corp. (NGA).

The company is currently valued at $1.9 billion and will trade on the NYSE. The Lion Electric stock ticker will show up on the NYSE as "LEV." But is Lion Electric a buy?

SPACs have been on fire in 2020. Some have even called it the "year of the SPAC." And believe it or not, this latest SPAC merger with Lion could be one of the biggest buying opportunities yet. Many SPAC deals in 2020 have involved emerging electric vehicle stocks wanting to cash in on the advent of EVs. Tesla (TSLA)'s newfound profitability over several quarters seemed to push EVs into mainstream headlines.

Now with several COVID-19 vaccines underway in 2021, there seems to be even more upside in the broad market. Continuing gains in the broad market indexes gives hope to any stocks making their debuts.

This bodes well for EV investors, in stride with a 687% industry growth projection from McKinsey. The research firm said this industry could go from $3.3 million to $26 million in value by 2030. This is all exciting news for EV stocks. But the story of the EV sector is really a "tale of two cities."

Why EV Stocks Aren't Made Equal

That is, an EV stock can either be a Workhorse Group Inc. (WKHS) or a Nikola Corp. (NKLA). We recommended Workhorse back in Jan. 30, when it traded for just $2.76. Readers who listened would have banked 689% profit by now. Nikola, on the other hand, has taken a relative nosedive since its IPO in June. The stock went from a high of $79 to just $18, a 77% loss for investors who bought at the top.

The biggest difference between these companies was that Workhorse already had some money in play. Workhorse had sold some electric truck units already, it had a budding delivery drone system, and it was in the process of setting up an old GM production plant for its own purposes.

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