Are you in the market for a low-priced stock with multi-bagger potential? Consider electric vehicle (EV) systems up-and-comer REE Automotive (NASDAQ:REE). It’s a risky proposition, I’ll concede, as REE stock isn’t doing particularly well in 2021 — but it just might pay off.
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To give you a quick primer, REE Automotive doesn’t actually manufacture cars. Rather, the company makes REEBoard, a modular system used to hold the battery and other components.
Additionally, the company makes REEcorner: a system designed to hold powertrains, steering and braking within a wheel well. It’s also important to know that REE Automotive is a product of a special purpose acquisition company (SPAC) merger.
As we’ll see, some traders have been putting negative price pressure on the stock. If you’re willing to take a chance on a possible hidden gem in the EV market, though, then let’s see what’s under the hood of REE Automotive.
A Closer Look at REE Stock
REE Automotive shares started trading on the Nasdaq Exchange on July 23. This occurred after a SPAC merger with the ambitiously named 10X Capital Venture Acquisition Corp.
The implied hope of 10x gains, however, aren’t panning out so far.
As is common for pre-SPAC stocks, the share price started out near $10. But REE stock was destined for significantly lower price points. By the last day of August, the share price had fallen to $6. Then, as of mid-September, the stock was hovering near $5.50.
What happened here? A contributing factor could be the market’s general weariness about SPAC stocks and electric vehicle industry stocks.
However, there could be a serious bargain right in front of us now. Don’t assume that the dropping share price of REE stock means the company isn’t making significant progress in multiple areas.
A Grant for EV Advancement
If anything can boost a start-up’s future prospects, it’s a government green-light. And speaking of green, REE Automotive received a nice capital infusion to the tune of $17 million from the U.K. government recently.
This funding was part of a larger $57 million investment coordinated through the Advanced Propulsion Centre.
Apparently, the larger purpose of the funding is to accelerate the U.K.’s move to zero-emission vehicles while de-carbonizing the nation’s transport networks. This should be good for the environment — and great for REE Automotive.
As COO Mike Charlton observed, the funding complements REE Automotive’s already considerable commitment to the U.K., in the form of a potentially important technology hub in the country:
“With the opening of our Engineering Center in the UK in February this year, this reaffirms our commitment to the region and is in line with our plans for the mass production of our breakthrough REEcorner and electric vehicle platform technology.”
REE Stock Has Forward Momentum
What Charlton is referring to is the Engineering Center of Excellence. This was established in the U.K. to industrialize the company’s products and manufacturing with “state-of-the-art testing and engineering equipment.”
Along with that, REE Automotive marked a number of events in recent months — all of which indicate the company’s forward momentum.
For example, the company reaffirmed its progress by developing and presenting five REEcorner architecture designs. The new tech is compatible with vehicles in classes one through six.
Also, during 2021’s first half, REE Automotive received five patent grants and filed 26 new patent applications. On the fiscal front, the company reported having about $300 million in cash as of July 22.
Moreover, REE Automotive chose Austin, Texas as the site of its U.S. Integration Center. This facility should have an annual capacity of 40,000 modular electric vehicle platforms. The new location and increased production will support REE Automotive’s targets for 2023.
REE Automotive Is a Risky Bet That Could Pay off
All in all, there are quite a few encouraging developments happening at REE Automotive. Yet the stock has disappointed the company’s investors so far.
Granted, there’s risk involved when you’re holding post-SPAC electric vehicle stocks. In the case of REE Automotive, though, the rewards could greatly outweigh the risks in due time.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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