- automotive startup lordstown will be merging with a new investor named diamondpeak to issue public stock without an initial public offering.
- the company is following in the footsteps of nikola, another ev startup that pulled the same move in june, and fisker, which said in july that it is carrying out a similar deal.
- lordstown is likely hoping to generate investment using the hype surrounding electric vehicles that has pushed tesla to be the most highly valued automaker.
several ev startups such as nikola have enjoyed surges in their stock prices as tesla's popularity—seen in historic gains in its stock price—has grown exponentially in recent months. a company such as lordstown will be looking to ride the wave over enthusiasm for alternative-fuel vehicles by going public. as a new company grows, it typically goes public via an ipo (initial public offering), usually after being in business for a few years and having a business plan and product that excite potential stock investors. but electric-vehicle startups with upcoming electric pickups, notably lordstown and nikola, are skipping all that and using what are called "blank check" companies (also known as special purpose acquisition companies) that are already listed on the stock market. this allows the startups to open up to public investment as quickly as possible. the wall street journal characterized the move as a sort of "reverse merger." today lordstown announced such a plan.
the ohio-based automotive startup will merge with diamondpeak holdings, a company with the sole purpose to merge or be bought out by a company that wants to fast-track itself into the stock market. the combined companies will rename themselves lordstown motors and will list on the nasdaq exchange as ride.
according to the wall street journal, the deal with diamondpeak includes $500 million in private investment, including a sizable $75 million from gm. the deal should be finalized during the fourth quarter of this year.
lordstown is likely hoping to generate investment using the buzz surrounding evs. tesla's recent market value dwarfs that of traditional automakers, making it the number-one most valuable oem on the planet even though it only produces a fraction of the vehicles that are produced by toyota, ford, gm, volkswagen, and honda.
when nikola went public after merging with vectoiq acquisition, it was worth more than ford for a short time.