New Providence Acquisition Corp.

NPA Details

Announces Business Combination with AST SpaceMobile: New Providence Acquisition Corp. (NASDAQ: NPA) is a publicly-traded special purpose acquisition company, focused on creating a merger or a business combination with other business. On 16 December 2020, the company announced that it has entered into a business combination agreement with AST & Science LLC (AST SpaceMobile), to create a combined company with an implied pro forma enterprise value of approximately $1.4 billion. Upon closing of the transaction, AST SpaceMobile will become a publicly-traded company, and it will be listed on the NASDAQ under the symbol "ASTS". The combined company is expected to receive up to $462 million in gross proceeds which shall be used to fund phase one of the commercial launch of AST SpaceMobile's space assets. The transaction is expected to close in the first quarter of 2021.

Launched Plans for Space-Based Mobile Network: AST SpaceMobile, in partnership with Vodafone Group, recently revealed its plans to launch the first phase of its space-based commercial mobile communications service in 2023 which will transform mobile network coverage for the 49 largest countries in the equatorial regions.

Outlook for AST SpaceMobile: AST SpaceMobile continues to benefit from operating leverage and low maintenance capital costs via its super-wholesale, business-to-business model. With its extensive IP and patent portfolio, AST SpaceMobile seems well-positioned to address the $1 trillion global mobile wireless services market. Moreover, it is well placed to rapidly scale its revenue streams as it deploys its space assets for nearly complete global coverage. AST SpaceMobile is expected to achieve $1 billion EBITDA in 2024 and over $9 billion by 2027.

Projected EBITDA (Source: Company Reports)

Key Risks: AST SpaceMobile is exposed to the risks related to potential delays or technical difficulties in developing and establishing a global satellite-based communications system. Further, it is exposed to the risks related to the global economic conditions and continued effects of COVID-19.

Stock Recommendation: Being founded in the year 2017, AST SpaceMobile has a limited operating history, making it difficult to evaluate and predict the company‘s future performance. Moreover, in the upcoming two years, the company does not expect to generate any revenue from its operations. The stock of NPA has provided a return of 25.04% in the past one month. The stock has a 52-weeks low and high price of $9.50 and $12.79, respectively. On the technical analysis front, the stock has a support level of ~$10.8 and resistance of ~$12.77. Considering the aforesaid facts, limited operating history of AST SpaceMobile, associated key risks with the business of AST SpaceMobile, and uncertainty surrounding the impacts of COVID-19 pandemic, we suggest investors to “Avoid” the stock at the closing price of $12.65, up by 5.07%, as on 23 December 2020.

NPA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Thunder Bridge Acquisition II, Ltd.

THBR Details

Business Combination with indie Semiconductor: Thunder Bridge Acquisition II, Ltd. (NASDAQ: THBR) is a blank check company, formed for the purpose of creating a merger or a business combination with one or more businesses. As on 23 December 2020, the company’s market capitalization stood at ~$515.77 million. On 15 December 2020, the company announced a business combination with indie Semiconductor (indie), a next generation automotive semiconductor and software innovator, to create a combined entity that will be named indie Semiconductor, Inc. and will be listed on the Nasdaq under the ticker symbol INDI. The implied equity value for the combined company is around $1.4 billion. This transaction will help indie in accelerating its growth initiatives and create an Autotech pureplay powerhouse. The transaction is expected to close in the first quarter of 2021.

Outlook: As per the company, the market for semiconductors is expected to exceed $38 billion by 2025, owing to strong demand for silicon and software content in automobiles. The business combination with THBR will help indie in addressing this growing market, and it will allow indie to capitalize on over $2 billion of strategic backlog and an additional $2.5 billion in identified pipeline opportunities. In the next five years, indie expects its top line to grow at a CAGR of 85% to approximately half a billion dollars. 

Revenue Projections (Source: Company Reports)

Key Risks: The combined entity is exposed to the risks related to indie's relationship with Volvo, and the related timing of production schedules and other key milestones. Further, the company is exposed to the risks related to the changes in the price of key materials and disruptions in supply chains for these materials.

Stock Recommendation: The stock of THBR has provided a return of 17.94% in the past one month. The stock has a 52-week low and high of $9.15 and $12.25, respectively. On the technical analysis front, the stock has a support level of ~$10.39 and resistance of ~$12.24. Considering the anticipated benefits from the business combination of indie Semiconductor, growing demand for silicon and software content in automobiles, large addressable market of indie, modest outlook, expected growth in indie top-line, and associated key risks, we give a “Speculative Buy” recommendation on the stock at the closing price of $11.96, up by 5.84% as on 23 December 2020.

THBR Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.