SPAC EV warns of lack of liquidity: the beginning of the end of the craziest stock market bubble ever


Electric Last Mile said it might not arrive until June. So far in this cycle, 25 SPACs have warned they may not make it, including 6 SPAC EVs.

By Wolf Richter for WOLF STREET.

Electric Last Mile Solutions, an EV startup that went public in June 2021 via a merger with a SPAC, revealed on Friday, May 27, after hours – when everyone had already left for the long weekend of the Memorial Day – that he wouldn’t occasionally run out of money between July and September, as he revealed two months ago, but instead would run out in June – that his money wouldn’t last not even until June, but only “until June”.

One way or another, the company has to find new investors, like right now, otherwise it will close its doors in a few weeks. In his SEC filing on Friday he said:

“The Company expects that, without obtaining additional financing, it will have sufficient cash to continue operations until June 2022.

“The Company’s current projections reflect, among other things, increases in professional service fees, employee retention costs and supplier payments.

“The company is actively seeking potential sources of cash and is working to expand its cash trail as much as possible during this process.”

On May 24, the company revealed in a SEC filing that its quarterly report for the first quarter (the 10-Q filing with the SEC) would be further delayed. He said he still hasn’t filed his required annual report (10-K filing) for 2021. He said on May 18 he received a Nasdaq delisting notice for failing to meet the requirements. filling.

“Company management is working diligently to complete Form 10-Q, as well as Form 10-K, and intends to file as soon as possible. However, the Company does not plan to file Form 10-Q. within the time period specified by Rule 12b-25 for the reasons discussed in the 10-Q Notice,” the company said in the May 24 filing.

Electric Last Mile is under investigation by the SEC. Its auditors threw in the towel in February and the company was unable to hire a new auditing firm and therefore has no auditors to audit the financial reports it has not yet filed. Additionally, the company needs to restate some of the quarterly reports it previously filed.

In February, CEO James Taylor and Chairman Jason Luo, both co-founders, were expelled, effective immediately, after an internal investigation into stock purchases they made just before the company announced that it would go public via a merger with a SAPC in December 2020.

For investors, it’s like, OK, it was fun while it lasted, but now the money is gone. Ahead of Friday night’s announcement, share [ELMS] closed at $0.71, down 94% from the June 2021 high:

I mean, you can’t make this stuff up.

It takes an awful lot of talent to produce a shitshow like this – excuse the technical jargon. But during the biggest bubble ever that is imploding, everything would be fine, and the stock market jockeys played eagerly because it was so much fun.

This mess would be funny as heck, if it weren’t so bad – serious not because it’s probably going to be the first SPAC of many in this cycle to go zero, and it’s almost there already, but serious because ‘it shows all the total garbage that has been sold by Wall Street with huge hype, for huge sums of money, to the public to make Wall Street and certain insiders immensely rich.

Electric Last Mile has the unique opportunity to be the first EV SPAC this cycle to go zero because its money-spending machine ran out of money. No hard feelings, folks, that’s how the game is played during bubbles, and someone always manages to hold the bag.

Dates announced outside the currency.

Starting Canoo Electric Vehicles [GOEV]which went public via a merger with a SPAC in December 2020, said in its Q1 revenue report, that it might not have enough cash to continue operating. He said “there is substantial doubt about the company’s ability to continue as a going concern”.

The company is now desperately trying to raise cash by selling new shares and borrowing – pulling in $300 million in equity sales and $300 million in debt sales.

It doesn’t help that the company is currently under investigation by the SEC, as it disclosed in a Filing with the SEC, regarding its merger with SPAC and its “operations, business model, revenues, revenue strategy, customer agreements, revenues and other related matters, as well as the recent departures of certain executives of the society “. Class action lawyers are having a blast with this show.

Many executives have left the company, including the co-founders, CEO, CFO and COO. It still does not have a CFO, only an “interim CFO”.

Canoo had $105 million of unrestricted cash on its balance sheet at the end of March. According to his indications, he expects to burn about $200 million in the second quarter and he has no income. If he’s able to raise $600 million immediately, he’d extend the track an additional three quarters, through the end of 2022 and maybe into 2023, and then that $600 million would be gone, and he wouldn’t. would still be no revenue to speak of.

The company has nothing close to a production-ready product, it made $0 revenue in the first quarter, while posting a loss of $125 million. The company would need billions of dollars from investors – not a few hundred million – to get to where it is able to generate enough revenue to cover its operating costs, which will take years, if ever it can. sell enough vehicles that it can’t even build yet.

But its shares have crashed 84% from their peak at $3.52, and raising those billions won’t come from selling crashed stocks.

Lordstown Engines [RIDE]which went public via a merger with a SPAC in October 2020, also included the “going concern” warning in its SEC filing, and its shareholders were rocked, with the stock plummeting 94% from report to the February 2021 summit.

At least 25 PSPCs have issued “business continuity” warnings.

According to Audit Analytics, quoted by the the wall street journal. During this cycle, 232 companies went public through mergers with SPACs. And at least 25 of them have recently issued warnings about running out of money and not being able to make it a ‘going business’.

At least six EV SPACS have issued business continuity warnings since 2021. And EV battery makers have joined the group.

They include some of my favorite imploded stocks. These SPACs have brutalized their investors before, and they will brutalize them again. And that’s just the beginning. During the dotcom bust, which took more than two years to settle, countless startups ran out of money and died and their shares fell to zero or were acquired for next to nothing.

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