Merging company

Electric Last Mile (ELMS) will declare bankruptcy after a difficult run – June 14, 2022

Last mile electrical solutions (ELM Free Report) recently announced that it would file for bankruptcy just one year after going public. It is the first in a line of electric vehicle (EV) players from special purpose acquisition companies (SPACs) to run into trouble and go bankrupt.

Electric Last Mile Solutions went public in June 2021 through a merger valued at $1.4 billion with Forum Merger III. However, it has been under the supervision of the United States Securities and Exchange Commission (“SEC”) since March. It now plans to liquidate through a Chapter 7 bankruptcy process.

The company said it encountered a number of hurdles and found it difficult to avoid them in a short period of time. The bankruptcy announcement comes three weeks after the Electric Last Mile reported it was at risk of running. More species.

Some of the company’s top brass resigned in February when it emerged they had bought shares in the company at steep discounts before it merged. The ensuing SEC investigation subsequently caused its shares to fall below $1. The company was forced to lay off nearly a quarter of its workforce.

In May, the company said it was at risk of debarment due to delays in filing its 2021 annual and 2022 first quarter financial reports.

Lately, pre-revenue startups have had the opportunity to gain easier access to an IPO before selling a single vehicle, which has caused them problems. Besides Electric Last Mile Solutions, other EV makers that have gone public by merging with a SPAC in the past two years, such as Faraday Future, Lordstown Motors, Lucid Motors and Canoo, have faced SEC investigations. and other delays and roadblocks in obtaining a vehicle. at the market.

The SEC has picked up on the issue and is revising the guidelines to put SPACs on a par with companies pursuing a traditional IPO. It plans to come up with new guidelines in the second half of 2022.

Zacks ranking and key picks

ELMS carries a Zacks Rank #3 (Hold), currently.

ELMS shares have plunged 98% in the past year compared to its industry’s 18.7% decline.

Image source: Zacks Investment Research

Top-ranked players in the automotive space include Wabash National Society (WNC Free Report), sporting a Zacks Rank #1 (Strong Buy) and Operation of the Fox factory (FOX free report) and Standard engine products (SMP Free Report), each currently carrying a Zacks Rank #2 (Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Wabash National has an expected earnings growth rate of 239.3% for the current year. The Zacks consensus estimate for current year earnings has remained constant over the past 30 days.

Wabash National’s earnings have topped the Zacks consensus estimate in three of the past four quarters and missed one. WNC realized a surprise on earnings for the last four quarters of 51.26% on average. The stock is down 9% over the past year.

Fox Factory forecasts a profit growth rate of 14.9% for the current year. The Zacks consensus estimate for current-year earnings has been revised up about 1% in the past 30 days.

Fox Factory’s earnings have exceeded Zacks’ consensus estimate for the past four quarters. FOXF has realized a surprise on earnings for the last four quarters of 10.18% on average. The stock is down 46.1% over the past year.

Standard Motor forecasts a 5.2% profit growth rate for the current year. The Zacks consensus estimate for current-year earnings has been revised up about 3.1% in the past 30 days.

Standard Motor’s earnings have exceeded the Zacks consensus estimate for the past four quarters. SMP realized a surprise on the profits of the last four quarters of 40.34% on average. The stock is down 14.5% over the past year.