Electric vehicle makers that went public via SPAC are facing a financing crunch after a market rout tanked share prices of the most embattled companies.
Why it matters: The heady days of the SPAC surge are over, and EV makers — and their investors — are getting left in the dust.
Driving the news: Electric Last Mile Solutions quietly amended its outlook via an SEC filing on Friday to update its financial guidance.
- It now expects to run out of money at the end of June if it does not obtain additional financing.
- It previously disclosed that it expected to run out of funding between July and September, according to an earlier filing.
- Its stock was just $0.60 at close Tuesday, an all-time low. Its original SPAC agreement valued the company at $1.4 billion in December 2020.
Context: EV maker Canoo, another SPAC cautionary tale, told investors in May there was "substantial doubt" about the company's ability to continue as a "going concern."
- Lordstown Motors, one of the first EV companies to go public via SPAC, also issued a going concern warning to investors on its most recent earnings call.
- Others former SPAC-ers like Nikola have faced setbacks such as lawsuits and executive departures in addition to tanking share prices as challenges mount against the industry as a whole.
Between the lines: SPACs were a risky bet that appealed to capital-intensive businesses like EV makers because of the expedited process, minimal disclosures and sometimes meager diligence processes.
- EV entrepreneurs and investors are painfully reminded that the house always wins.