EV IPO Insta-Collapse: Phoenix Motor plunges into the void on day 1, more on day 2. The SPI Energy matrix has already imploded 99%

Wall Street is still trying to bleed retail investors. But they are no longer so eager to be bled.

By Wolf Richter for WOLF STREET.

In terms of my Imploded Stocks column, which is getting longer and longer, this addition is special: when the small electric vehicle company Phoenix Motor went public on Wednesday, the stock [PEV] instantly kathoomph into the void.

From the IPO price of $7.50 to around $4.50 it was just a void, and trading volume started below $4.50. The shares ended the first day of trading at $4.13, down 46%. In early trading today, the stock is down another 10% and is currently at 3.66, down 51% from yesterday’s IPO price. This is the per-minute chart for the now infamous first day:

To make the share offering more palatable to wary investors, the offering was reduced to 2.1 million shares, down from the 2.5 million shares still imagined the day before in the SEC filing, and the IPO price was set at $7.50, at the lower end of the $7.00-$9.00 range indicated the day before.

With this IPO, Phoenix raised just $17.75 million, giving it a valuation of $150 million. The $17.75 million raised is useful because in its S-1 filing with the SEC, the company said it had only $66,000 in cash left at the end of March. Which explains the desperation of the IPO. Because that $66,000 has probably already been burned.

In the S-1 file, the company said it only had $2.9 million in revenue in 2021, which generated a loss of $14.6 million. Therefore, the funds raised can provide enough money to operate for just over a year at the 2021 burn rate.

Phoenix has been installing electric powertrain systems on vans, trucks and buses that are based on the Ford E-350 and E-450 cut-up chassis that were originally designed for internal combustion engines. Some buses are used in the LAX Wally Park parking complex. The company has been doing this for years. These are essentially post-thought conversions of ICE vehicles into EVs.

Converting a chassis designed as an ICE vehicle is the most expensive way to build a mediocre EV. Traditional carmakers and startups are working on blank-slate commercial electric vans and trucks, and that’s the competition going forward.

Phoenix says in a document to the SEC that it is now working on a “basic chassis”, meaning its own blank slate design of an EV chassis.

But wait… That $17.75 million raised from the IPO isn’t enough to design a real EV from scratch, and growing a real EV to manufacture requires hundreds of millions of dollars and more likely a few billion dollars to get production. in volume going. The $17.75 million the company raised in the IPO isn’t enough to do much in the capital-intensive manufacturing world.

The owner of Phoenix is ​​an entity of SPI Energy, which acquired Phoenix Motor in 2020. SPI is a Chinese company, based in Shanghai. Installs solar panels, among other things. The Chinese company created an entity in the US, which became public in the US on January 19, 2016 [SPI].

On the morning of the first day of trading on January 19, 2020, amid massive hype and commotion, SPI Chairman Xiaofeng Peng and his management team rang the opening bell for the Nasdaq. And, of course, it was the opening bell of a process by which American investors were plundered.

Amid all the hype and fuss that Wall Street investment banks are trying to lure retail investors into handing over their cash, the stock soared to over $170 on the second day, its all-time high, and then plummeted 99% . Today in early trading, it’s at $2.34

So now that the EV and SPAC IPO boom has been in full collapse for over a year now, with many IPO EV stocks and EV SPAC stocks dropping 80% and over 90%, SPI needed to start unloading Phoenix while it still could. , and they needed investors to get to that $17.75 million right away – really a lot more, but that didn’t work because investors refused – to keep the company going long enough for SPI to offload the rest, and they needed to get this company out of the IPO window which has already closed.

This naughty IPO might not set an all-time record in terms of instantaneous collapses – I haven’t checked the IPO’s history of instantaneous collapses – but it sure was a sight to behold.

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