What happened
Shares of Atlas Crest Investment (ACIC) jumped 15.1% in February, according to data from S&P Global Market Intelligence. The special purpose acquisition company (SPAC) soared following an announcement that the business planned to merge with electric-plane company Archer.
Atlas published a press release on Feb. 10 announcing plans for the merger. The combined company will begin operating under the Archer name and trade under the ACHR ticker symbol after the merger is complete. At the time of the merger announcement, Atlas stated that the adjusted equity value of the combined companies would be approximately $3.8 billion.
Two people next to an Archer electric plane. Image source: Archer.
So what
SPACs have gained favor over the last year as a way for small, growth-focused companies to go public, but many stocks in the category have also suffered substantial sell-offs after initial gains following a merger announcement. Atlas stock did see a pullback in conjunction with the sell-off for growth-dependent tech stocks that rocked the broader market at the end of February, but the company was still able to close out the month with strong double-digit gains.
Archer is aiming to deliver the world's first all-electric commercial light aircraft, and the company's current model is capable of traveling up to 60 miles at 150 miles per hour on a single charge. Electric planes represent an interesting growth market, but investors should proceed with the understanding that Atlas stock is predisposed to volatility, and its share price has trended lower amid the continued sell-off for growth stocks.
Now what
Atlas Crest stock has lost ground in March's trading so far, sliding roughly 17.5%.
The merger between Atlas and Archer is expected to be completed in the second quarter of 2021. Archer is positioning itself as an early leader in the electric urban air-mobility niche, and the business has also received investment from United Airlines and Stellantis. But it's still not clear how much demand there will be for its specialized vehicles, or what the space might look like if competitors devote more resources to it.
