Switchback II Corp (NYSE: SWBK) has started catching the FinTwit community’s eye following a spike in volume today. Trading volume notably exceeded the average of around only 400 thousand when it reached 4 million on October 27th. As SPAC’s gain popularity, SWBK has been gaining momentum on news of a merger with Bird Rides Inc, making it one of the stocks to watch this week.
In May, SWBK issued a PR announcing that it has successfully entered into an agreement with Bird Rides, Inc. which operates a fleet of shared electric scooters in over 300 cities around the world. The merger will bring Bird Rides public, listing it on the NYSE. The merger is expected to take place in the coming weeks after the “Extraordinary General Meeting” on November 2nd to discuss the planned combination of both businesses.
Micro mobility companies have become increasingly popular and Bird Rides has particularly benefitted from the Covid-19 pandemic. Increasing restrictions and social distancing offered an opportunity for the company to market its scooters to a population eager to get outside safely. Bird Rides has an implied valuation of $2.3 billion which could make this SPAC a good investment opportunity for those getting in early.
In preparation for the merger, Bird secured $160 million in private investment in public equity chiefly from Fidelity Management & Research Company LLC. Another $40 million came from Apollo Investment Corp. and MidCap Financial Trust. According to SWBK the resulting company can retain net proceeds of up to $428 million cash. Currently Switchback has $316 million cash-in-trust.
Meanwhile, Bird has been busy bringing in fresh blood. The newest addition to its board has been Bob Komin who brings more than 20 years of experience as a CFO to the table. He also led SunRun – a provider of residential solar panels and home batteries – through an IPO. The rest of the board consists of individuals who’ve worked for the likes of Uber, Goldman Sachs, Oracle, Twitch, and Paypal.
Despite its strong management, Bird faces an uphill battle considering the hefty overhead costs of its business. 2020 was a difficult year for the company which reported 37% YOY drop in revenue that forced lay offs across the company. But according to Bird’s Q2 2021 report, it achieved an incredible 477% YOY increase in revenue as it surpassed predictions by over 30% and achieved $60 million in revenue. Clearly, Bird’s strong fundamentals are what has landed SWBK on many investors’ lists of stocks to watch.
Its also worth noting, that at the current rate the e-bike market is forecast to reach $20 billion by 2023 as more and more people opt for this convenient transportation. However, the performance of this SPAC play will likely be decided in part by Bird’s Q3 financial results which are expected to be released on November 15th.
@yatesinvesting and many other investors are catching the signs that this SPAC could be major and with @warrenpuffettt on board, SWBK is definitely a stock to watch.
SWBK shows a resistance at $10, and is currently trading just below it at $9.99. The stock has been witnessing an upward trend for a few months. After stable accumulation, it recently dipped heavily with a bearish crossover on the MACD. Its RSI is currently at 52.98 but could pick up as it becomes one of the stocks to watch.
Should You Buy?
With whales loading up on SWBK in preparation of the merger, interest is definitely picking up for SWBK which will be listed as BRD after the merger is completed. The market for e-bikes has increased notably and Bird’s strong financial recovery could be cemented by the upcoming financial report and shareholder’s call. SPACs are also returning to popularity among investors and given the bullish signs for SWBK, this could be a good investment opportunity considering Bird’s potential.
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