Despite 2021 being a record-breaking year for initial public offerings (IPOs), most companies that went public ended up underperforming the market. However, that hasn’t stopped most investors from eagerly awaiting the next hot IPO to emerge onto the scene. There were a couple of big IPO or SPAC announcements on Wednesday, but the most newsworthy of which had to be Vertical Aerospace (NASDAQ: EVTL), whose stock that went public before the new year but is only now picking up traction.
While a lot of attention has been going towards electric vehicles in recent months, the past weeks have seen the emergence of a new type of vehicle company. In particular, vertical takeoff and landing vehicles (or eVTOLs) are getting a lot of attention from growth-hungry investors. Vertical Aerospace is one of these companies aiming to become to flying cars what Tesla was to EVs.
Vertical Aerospace went public through a SPAC merger that originally went public on December 17th. Whether because of the Christmas season or some other reason, Vertical didn’t really grab much attention at the time. Traditional IPOs typically see more trading volume than SPACs, which might be one reason why. Almost a month later, however, Vertical Aerospace ended up skyrocketing in value.
While there wasn’t any big catalyst behind the move, Vertical’s management team did officially ring the opening bell at the iconic NYSE on Wednesday. The stock quickly started getting mentioned on social media, which eventually led to an avalanche of traders jumping on the company.
Vertical Aerospace is the fourth eVTOL company that started trading this past year. Other notable flying taxi companies include Joby Aviation (NYSE: JOBY), Archer Aviation (NYSE: ACHR), and the German-based Lilium (NASDAQ: LILM). Unexpectedly, all three of these other companies were down a few percent on Wednesday.
According to Vertical’s management, the company has already received conditional pre-orders for over 1,350 units. The main customers include American Airlines, Avolon, Iberojet, and a few other aviation-related companies. Many of these initial customers were early investors as the company raised around $300 million through its SPAC transaction.
Shares of Vertical Aerospace were up over 45.5% over the course of the day. Right now in Thursday pre-market trading, shares retreated a bit, but are still up 29.1% over the past 24 hours. Chances are, Vertical is going to see a pretty stark reversal either on Thursday or Friday, with many traders choosing to sell off their gains while they still can.
The outlook for speculative growth stocks, including IPOs and SPACs, might be even grimmer going into 2022. Further Fed interest rate hikes are expected to hurt growth stocks, while encouraging investors to migrate over into value-based investments. While IPOs aren’t going to disappear at all, given their relatively middling performance last year, it’s not surprising some investors are lowering their expectations for how well IPOs and SPACs can do in 2022.
Vertical Aerospace Company Profile
Vertical Aerospace Ltd is engaged in making air travel personal, on-demand, and carbon-free. The VA-X4, Vertical’s flagship aircraft, is a piloted electric vertical take-off and landing (eVTOL) vehicle, capable of carrying four passengers. – Warrior Trading News
