Social Capital Hedosophia Holdings II Corp.

Merger with Opendoor: - Social Capital Hedosophia Holdings II Corp. is a company that focuses on forming a merger, asset acquisition, share purchase, reorganisation, share exchange or similar business combination with one or more businesses in the technology industry. On 15 September 2020, the company announced the signing of a definitive business combination agreement with a leading digital platform for real estate company – Opendoor. Under the transaction, Opendoor will receive ~$1 billion in cash proceeds. The single parent company total pro forma enterprise value would be approximately $4.8 billion, representing 1.0x of 2019 revenue. The Opendoor is looking to invest the cash proceeds into growth, market expansion and new products to become digital one-stop shop for homeowners. After completing the transaction, existing Opendoor shareholders will own ~100% of the pro forma equity.

June 2020 Quarter Results: During the June 2020 quarter, Social Capital Hedosophia Holdings II Corp incurred a net loss of $277k and prepaid expense of $342k. At the end of June quarter, the company had cash of $987.69k and total current liabilities of $14.62 million.

Opendoor’s Outlook:  In FY 2020, the company expects its revenue to be around circa $2.5 billion, representing a decline of 48% on the previous year. In the same time span, the adjusted gross profit would be $172 million, and adjusted EBITDA loss to be $141 million.

Stock recommendation: Over the last one month, the stock of IPOB has increased by 76.98% and is currently trading close to its 52-week high level. On a technical front, the stock of IPOB has a support level of ~$16.7 and a resistance level of ~$19.34. Considering the expected decline in Opendoor’s FY20 revenue, and current trading levels, we suggest investors to avoid the stock at the closing price of $18.99, up by 1.28% on 30 September 2020.

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

Spartan Energy Acquisition Corp

SPAQ Details

Spartan Agreed for a Merger with Fisker: Spartan Energy Acquisition Corp is a special purpose acquisition company, focused on the merger, stock purchase, asset acquisition, capital stock exchange, reorganisation or similar business combination with one or more business in the energy value chain. On 13 July 2020, the company announced that it has entered into a definitive agreement with an electric vehicle company - Fisker Inc. Under the transaction, Fisker Inc will receive ~$1 billion in cash, resulting in a total pro forma equity value of approximately $2.9 billion. On 6 August 2020, the company released an update that stockholders approved an extension of the date to complete a business combination from 14 August 2020 to 14 February 2021.

June 2020 Quarter Results: During the June 2020 quarter, the company spent $970k on general and administrative expenses and $30k from administrative fees and incurred a net loss of $894k. At the end of the quarter, the Cash and cash equivalent declined to $323k from 548k, but an increase in total assets by $569k from $565k in the pcp. The total liabilities increased to $21 million in H1 HY20 from $19 million in H2 FY19. 

June Quarter Statements of Operations (Source: Company Reports)

Outlook:  Fisker will fully use $1 billion of cash proceed to develop the all-electric Fisker Ocean.  The company is looking forward to starting production of EV in FY2022.

Stock Recommendation: As per Nasdaq, the stock of SPAQ gave a return of 42.77% in the past six months and a return of 10.92% in the past one month. The stock is trading below the average 52-weeks’ price band. On the technical analysis front, the stock of SPAQ has a support level of ~$14.24 and a resistance level of ~$17.29. Considering the timeline for Fisker Inc to produce EV vehicles, limited financial information, and the risks associated with the combined business, we suggest investors to avoid the stock at the closing price of $14.42, down by 0.07% on 30 September 2020.

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

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