Why Hyliion (HYLN) may see $25 before $55

The ride for investors in HYLN stock will likely be choppy.

The special purpose acquisition company (SPAC) and a new energy sources boom have pushed the price of (NYSE:HYLN) stock to the highs back at the beginning of September. Since June Hyliion was having a great run but things started changing then and HYLN stock is now hovering around $40.

In late June, Tortoise Acquisition (NYSE: SHLL), a SPAC, announced that it had agreed to merge with Hyliion,a powertrain solution developer for Class 8 commercial vehicles . The combined entity changed its name to Hyliion Holdings Corp and its NYSE trading symbol to HYLN.

The young trucking company has been getting a lot of attention in recent weeks. Today, we’ll discuss what investors may expect from HYLN stock in the coming quarters.

Trucking Is Hot

According to recent research by Statista the U.S. Class 8 market is dominated by Freightliner (part of Daimler subsidiary Daimler Trucks North America) holding a market share of about 36.5 percent in December 2019 while in total, customers in the U.S. bought more than 276,000 heavy-duty trucks in 2019. Hyliion is after this huge market with its lower carbon emissions and lower cost of ownership solution. “Hyliion’s solutions were specifically developed to utilize existing infrastructure in an effort to support rapid technology deployment. Our mission is to enable our fleet customers to quickly realize lower carbon emissions and significantly lower cost of ownership benefits provided by our technology.”-said Thomas Healy, CEO and founder of Hyliion.

What to Expect From HYLN Stock

Although the industry in which HYLN stock operates is rapidly changing, there has been some discussion about the trucking lately, especially thanks to Nikola Corp (NKLA) GM deal followed by NKLA stock scandal and a huge drop.

This was definitely not the best timing for companies to hit the market using SPACs, especially for the companies in the same niche as Nikola.

In addition to this concerns, I’d also like to highlight the volatile price moves SPAC reverse mergers exhibit. Most SPACs start trading around $10. SHLL stock moved to over $31 following merger announcement in Jun. This means that in a matter of days, SHLL more than tripled to hit an all-time high of 31.84 on Jun. 29.

Another spike that almost doubled the value of HYLN was on Sept. 2 and things started getting slow from thereon. This was a chance for early investors to sell for a hefty profit. Another sort-of-a-catalyst will be happening tomorrow, Monday morning, when CEO of Hyliion will be ringing the opening bell at NYSE. But this might be “sell the news” event.

But not all SPAC reverse mergers end up becoming successful or creating shareholder value. Quite a number of such listed-companies eventually go below $10. Therefore, it is too soon to tell if HYLN stock will be able to create a boom in the market with Tesla (TSLA) and Nikola (NKLA) promising low-emission trucks coming our of their production facilities in the years to come.

Companies that have ordered Tesla semi trucks include:

Walmart
FedEx 
UPS
Pepsico
DHL
Anheuser-Busch
Sysco
Ryder
JB Hunt
Loblaw
Meijer
Bison Transport
NFI
Fercam
Asko
Flexport
Fortigo
Mecca & Son
Girteka Logistics
Breytner
JK Moving Services
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— Jon Erlichman (@JonErlichman) October 4, 2020
 

On the other side, Mr. Healy said, referring to NKLA. “With hydrogen fuel cells, you need to build out all this infrastructure. We already have over 700 natural gas stations. The capital we’re bringing in, we’re using to develop and deploy the technology.”