I’ve written about a bunch of “pre-IPO” investments in the past, but Ian Wyatt has probably been more relentless than anyone else in promoting this idea of “buying in before it’s public” … particularly when it comes to the hot “brand names” that excite investors.
Wyatt’s latest pitch is for a “webinar” that will air tomorrow at noon, so we obviously haven’t heard the hard sales pitch yet, but we can make some educated guesses for you. We don’t even know what newsletter he’ll be pitching, but in the past he has used these “pre-IPO” ideas to sell his Million-Dollar Portfolio.
His latest email subject line is that “The Next Tesla is Going Public — Get Shares Today,” but when you click through to the signup page for his webinar presentation about “The Pre-IPO Profit Secret”, the initial headline is about buying Palantir before the IPO.
So we’ll look into both of those quickly for you. They’re also good examples of the two basic kinds of publicly-traded “pre-IPO” investments that most investors can easily make.
The first one, the “next Tesla,” is teased thus:
“Electric vehicles are red hot …
“And that recently sent Tesla Motors (NASDAQ: TSLA) shares to a record high of $498.
“One new company is being dubbed “the next Tesla.” And it’s getting ready to go public in a historic IPO.
“Don’t wait! You can grab Pre-IPO shares BEFORE this next electric vehicle stock starts trading in November.”
I’m sure he’ll drop more hints in the “webinar” tomorrow, but those sessions always feel like the timeshare sales presentations you get sucked into at vacation resorts — so we’ll just jump the line a bit and tell you what I’m pretty sure he’s pitching here: This is very likely to be Fisker that he’s talking about, a name that will be familiar to folks who follow the auto industry.
Fisker Automotive was founded in 2007 by Henrik Fisker, a well-known automotive designer associated who was behind a few well-known cars for Aston Martin and BMW. He produced a couple thousand Fisker Karmas, a luxury plug-in hybrid, but they only produced for a couple years before first their battery supplier, then Fisker Automotive, itself went bankrupt (or nearly so, I don’t know if Fisker Automotive technically liquidated — but they sold everything other than the Fisker name to a Chinese company). They were reborn in 2016 as Fisker, Inc., with a new lineup of ambitious plans for electric vehicles and solid state batteries… including their first planned product, the Fisker Ocean. They’re taking reservations for that one now, and say they’ll be delivering this car, with an intro price similar to a low-end Tesla, in 2022.
So how is it that we can buy “pre-IPO” with this one? Well, Fisker has agreed to merge with a special purpose acquisition company (a SPAC, also often called a “blank check” company), and that will result in Fisker being a public company. The SPAC that they’re planning to merge into is managed by an arm of Apollo Global Management, a big private equity company, and is called Spartan Energy Acquisition Corp (SPAQ), and the deal is expected to be finalized before the end of the year (November is a good guess, though I haven’t seen any final dates yet).
Henrik Fisker is a bit of a showman, though not quite in the Elon Musk mold… and his overpromising might have even made Elon blush from 2010-2013 or so, which would give me ample reason to be cautious about this one, but I haven’t looked at it very closely in recent years. I have no idea whether or not Fisker 2.0 will work out, but I’d probably go in with some healthy skepticism. If you want to give yourself room to become a true believer in Fisker, the interview Henrik Fisker did with Barron’s might get you excited — you can listen to that here.
Here’s the comment from Car and Driver about the Fisker Ocean, in case you’re curious:
“The tide is turning for electric vehicles as more and more new models flood the market, and Fisker Automotive looks to capitalize on that sentiment with its aptly named Ocean SUV. While it’s still a couple of years away—or potentially more based on the company’s history of broken promises—the Ocean has a low starting price ($37,499) and long driving range (up to 300 miles). It also could benefit from the brand’s partnership with Electrify America, which might include some complimentary charging for customers. With a design similar to the handsome Range Rover Evoque, the 2022 Fisker Ocean could prove a compelling entry among the burgeoning EV SUV segment.”
Fisker’s “Investors” page is essentially the press release about the SPAC merger, and it sounds like the money from the SPAC and from the additional private financing they’re going at the same time, a total of about a billion dollars, will go to funding initial development of the Ocean… which is being outsourced to Magna International (MGA, MG.TO), the big Canadian auto parts company.
The deal values Fisker at about $2.9 billion, but that’s at $10 a share — at the current price if about $14 a share, the market cap of the company after the merger would be about $4 billion, and from what I can tell it will essentially consist of the Fisker brand, their current car designs and plans, and a billion dollars in cash. Whether or not that’s worth $4 billion, you’ll have to decide… auto startups are really tough, and, as we’ve seen with Tesla, they don’t generally make money for a very long time — so if the CEO isn’t able to light a fire under investors and keep the excitement level (and trust) eleveated, there’s every chance it could be the next Delorean or Tucker. Or the next Fisker Automotive.
Once the deal goes through, as is expected (though never guaranteed), SPAQ will become FSR, and the warrants associated with this SPAQ, now at SPAQ.WS or SPAQW depending on your broker (or something similar) will become FSR.WS. Each warrant gives the holder the right to buy SPAQ (or FSR, once the deal is done) at $11.50 for a period of five years after the deal consummates (subject to an “early redemption” or “forced exercise” if the shares trade over $18 a share for 20 days in a 30-day period). That would provide a bit of leverage if the shares surge in excitement following the deal’s