What happened
Shares of EV truck and technology company Cenntro Electric (CENN) gained as much as 56.7% in mid-day trading Monday. Shares of the small-cap stock lost some of those gains but still ended the day up 20.8%.
So what
Cenntro makes commercial electric utility vehicles, including box and flat bed trucks, vans, and terrain vehicles. Shares soared after Cenntro announced an acquisition today that will expand its capabilities in Europe. While a relatively small purchase valued at about $16.5 million, that amount represented more than 5% of Cenntro's total market capitalization heading into today's trading.
Image source: Getty Images.
Now what
Relative to Cenntro's market cap, an acquisition that size would be like Tesla making an investment worth about $45 billion. That would be meaningful, and investors believe this could be meaningful for Cenntro's growth plans.
Cenntro chairman and CEO Peter Wang said in a statement:
Through this acquisition, we gain a significant geographical advantage and the addition of key management personnel within the European region, unlocking significant global growth opportunities for the company.
The purchase of Tropos Motors Europe will allow Cenntro to offer more light-to-medium-duty commercial vehicles by adding a European customer base, as well as expand its assembly capabilities and distribution network. Commercial delivery and work vehicles are a niche for EV manufacturers that should continue to grow as companies work to lower their carbon footprint. With oil prices spiking at the same time today, investors are putting money in many EV manufacturers, like Cenntro, they think will have plenty of market demand to satisfy.