What happened
Electronic car tech specialist Cenntro Electric (CENN) was trading down by 15% as of 11:30 a.m ET Friday, compared to a 0.3% drop in the S&P 500.
The decline added to the significant losses investors in the small company have experienced of late. The stock has shed over 50% so far in 2022. Cenntro announced a completed acquisition before trading began on Friday, and that news put more focus on the company's exposure to a potentially slowing European market.
Image source: Getty Images.
So what
Cenntro said it completed its planned purchase of a majority stake in the European division of Tropos Motors, which maintains large manufacturing and distribution centers. The terms of the deal included a direct payment plus the assumption of a portion of Tropos' debt.
The news was no surprise, as the deal had been announced previously, but it likely intensified investors' focus on Cenntro's growing exposure to the potentially volatile European selling market, where conflict, geopolitical concerns, and supply chain challenges might pressure sales and earnings over the short term.
Still, it's worth noting the Cenntro stock initially soared on news of the planned purchase, and Friday's slump just erased a small piece of that surge.
Now what
Cenntro is excited about the added production capacity and market access that this purchase will give it over the next few years. In the shorter term, meanwhile, investors should look for the commercial electronic vehicle specialist's first earnings report as a public company to happen within the next few weeks.
That announcement should contain more details about Cenntro's European sales trends, its integration of Tropos, and its sales outlook for the rest of 2022.