Hyliion makes an all-electric drive system for heavy-duty trucks.
Courtesy HyliionHyliion made its debut on the New York Stock Exchange on Friday morning, having completed a merger with Tortoise Acquisition Corp. , a special-purpose acquisition company, or SPAC.
The transaction provides Hyliion (ticker: HYLN) with over half a billion dollars to put toward developing and commercializing its Hypertruck ERX all-electric drive system for heavy-duty trucks. Hyliion’s CEO, Thomas Healy, becomes the youngest public-company chief in the U.S., at 28 years old.
“It’s an exciting day,” Healy tells Barron’s. “But we’re just as heads down and focused on the tasks and goals and objectives that we have in front of us, because ultimately that’s what’s going to make the company successful.’
Hyliion stock was down 11% on Friday morning, to about $40. It gives the company a market value of roughly $6.5 billion.
Tortoise Acquisition Corp., or Tortoise I, ceased to exist when the companies merged. Its CEO, Vince Cubbage, joins Hyliion’s board of directors. He’s also CEO of another SPAC sponsored by Tortoise Capital Advisors: Tortoise Acquisition Corp. II (SNPR. U).
A lot has changed since the original merger agreement between Tortoise I and Hyliion was signed in June. Electric and alternative-fuel transportation stocks have soared—Tesla (TSLA) chief among them. Nikola (NKLA), once the largest alternative fuel-cell company in the heavy-duty trucking world in terms of market value, has run into some trouble.
Nikola stock is down about 34% since the short seller Hindenburg Research published a report alleging founder Trevor Milton misled investors about the company’s technology, among other things. The company denies the claims. Milton stepped down from the board of directors in mid-September citing his desire to keep investors’ focus on the company.
Nikola stock has rallied 28% this week on reports that General Motors (GM) wouldn’t walk away from a deal to help the startuo with parts, manufacturing, and engineering, but instead might take a larger stake than the 11% agreed on in early September.
Nikola’s woes haven’t hurt Hyliion, according to Healy. It has increased the level of scrutiny from outside investors and customers, but that hasn’t been a problem.
“Customers are wanting to do an extra layer of diving into the details and understanding the technology,” says Healy. “And we’ve actually seen that as a positive thing.”
Looking ahead, investors can expect to see analysts launch coverage of the company. None cover Hyliion yet. About 30 analysts track the average company in the Dow. Nikola, for comparison, has five analysts following its shares.
Another point to watch is what happens when warrants (HYLN-W) on Hyliion stock become exercisable in about 30 days, giving holders the chance to buy stock at $11.50. The warrants recently went for $20.55, so holders who bought at that price stand to make money if shares, now at about $40, are selling for more than about $32 in early November.
There are, very roughly, 20 million warrants outstanding. When they are exercised, the share count will increase, but the company could take in additional cash to fuel growth. (It could also choose a cashless exercise, giving warrant holders a smaller amount of shares, but without collecting the $11.50.)
Tortoise Acquisition II is taking aim at a universe of companies similar to those the first SPAC targeted. “We’re continuing to look for things that decarbonize the economy,” with a focus on growth companies, Cubbage says. Transportation remains interesting, he says, but he notes that valuations in the sector have climbed in recent months.
Tortoise II went public in early September, raising $345 million. The offering included units consisting of one common share and a quarter of a warrant. That’s down from a half warrant per unit in Tortoise I’s IPO. It’s a sign that IPO investor demand was greater for the second SPAC because the team had a successful transaction under their belts.
Hyliion stock—which traded under the SPAC’s stock symbol SHLL before consummation of the merger—has been volatile this week, moving more than 6.8% each day. The stock is up 309% year to date, far better than comparable returns of the S&P 500 and Dow Jones Industrial Average.
Write to Nicholas Jasinski at nicholas.jasinski@barrons.com and Al Root at allen.root@dowjones.com
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