What happened

Shares of special purpose acquisition company (SPAC) DiamondPeak Holdings (NASDAQ:DPHC) skyrocketed 63.9% in August, according to data provided by S&P Global Market Intelligence. That handily outperformed the broader market.

So what

You can't spell "fever" without "EV," and the stock market has been feverishly buying up shares of electric vehicle makers this summer. The sudden attention to the sector has prompted some EV companies to go public through a reverse merger with a SPAC, a move that avoids a traditional IPO. Electric truck start-up Nikola used a similar technique when it went public earlier this year.

A gauge showing the charge in an electric vehicle.

Image source: Getty Images.

That's what's happening to start-up electric pickup manufacturer Lordstown Motors, which announced on Aug. 3 that it would be going through the process with DiamondPeak. That caused DiamondPeak's shares to jump immediately. They only rose higher through the month as EV fever continued, buoyed by the impending stock split of Tesla and frequent news about other EV hopefuls like Nikola and NIO

Now what

Like Nikola, Lordstown Motors is taking pre-orders for an electric pickup truck, the Endurance. So far, it's collected about 27,000 orders. Unlike Nikola, Lordstown Motors has an existing manufacturing facility for its pickup: the former General Motors plant in Lordstown, Ohio, which made big headlines when it closed in 2019. The Endurance will feature an "in-wheel" drive system consisting of four electric motors, one located in each wheel. 

Also like Nikola, the company hasn't put a single vehicle into production. Technically, DiamondPeak doesn't even own Lordstown yet; the reverse merger won't happen until the fourth quarter of this year (unless something goes wrong). Production is expected to begin in late 2021 (unless something else goes wrong). 

While Lordstown seems to be on slightly firmer footing than Nikola, it's far from a sure thing. Neither one is Tesla, which has a comparatively long history of producing and selling operational vehicles, and is still a volatile and risky stock. Investors should be aware that, at least for now, DiamondPeak is a speculative investment fraught with risk. Most will want to keep it on the watch list as opposed to the buy list for the time being. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.