I’m amazed this has happened. Back in October of 2020, I recommended owning shares of special purpose acquisition company (SPAC) Tortoise Acquisition in order to take a position in Hyliion (NYSE:HYLN). I expected SHLL stock, which was converted to HYLN stock, to go higher – and it did, but then it plummeted.
Not only did the share price go down, but it fell below its price prior to the announcement of the SPAC merger. Somehow, the market’s saying that Hyliion is worth less today than the shell company was in 2020.
I find this hard to believe. Thus, today I’ll construct an argument in favor of owning HYLN stock.
Along with that, I’ll venture a guess as to why the market has decided to dump the shares. And if you’re a true contrarian, then this could be your opportunity to buy low and hopefully, sell high.
A Closer Look at HYLN Stock
Prior to last June, HYLN/SHLL stock was trading near $10. That’s not unusual for SPAC stocks in their early phases.
However, a sharp rally took place in anticipation of the closing of the merger. On Sept. 2, the stock touched a 52-week high of $58.66.
After the Tortoise-Hyliion merger was finalized, HYLN stock debuted on the New York Stock Exchange on Oct. 2, 2020. At that time, the share price was still fairly close to $40.
I don’t usually recommend chasing stocks after they’ve made such a quick and powerful move to the upside. It shouldn’t be too surprising, then, that Hyliion shares continued to trend downwards in the following months.
Still, the retracement may have been overdone. As of midday April 21, 2021 HYLN stock is priced at $8.42. That’s what I would call a round trip, and then some.
So, should prospective investors consider this a falling rock, or a prime buying opportunity?
If you believe that Hyliion deserves more respect, then it might be time to consider starting a position.
Seeking the Gold Standard
When it comes to Class 8 truck electrification, Hyliion is seeking to take an early-stage leadership position.
The company has even taken the step of forming what’s known as the Hypertruck Innovation Council.
I must admit I’m a little jealous of the Council’s members, as they’ll be “the first to operate the Hypertruck ERX … providing direct feedback to actively advance the powertrain’s path to commercialization”
This Council (and, by extension, the company) will represent more than 100,000 Class 8 commercial trucks globally. It will consist of a veritable dream team of industry experts from the commercial transportation industry.
It appears that Hyliion wants to make the Hyliion Hypertruck ERX the gold standard of Class 8 truck electrification.
Through this truck model, Hyliion is preparing to deliver lower operating costs, reductions (or even net-negativity) in emissions, quick refueling and superior performance to commercial fleets.
Won’t Happen Overnight
The thing is, none of this will happen quickly. The markets aren’t exactly known for being patient nowadays, but HYLN stock is a “buy now, make money later” type of investment.
The fact that Hyliion is forming what’s essentially a quality control council is a sign, I believe, that the company wants to create the best truck possible prior to the public release.
In other words, the company is choosing quality over the speed of release. This short-attention-span market doesn’t seem to appreciate Hyliion’s strategy, which could pay off big-time in the long run.
The wait might not even be very long, actually. As InvestorPlace contributor Chris Markoch reports, “Customer trials are scheduled for some time this year.”
Moreover, Hyliion’s launch partner, Agility Logistics USA, has already pre-ordered 1,000 trucks.
Ironically enough, this hyper market doesn’t seem to appreciate the Hypertruck. Perhaps traders will start to see its value after HYLN stock rebounds.
The Bottom Line
Admittedly, it takes patience and foresight to see the value of the Hypertruck ERX, and of Hyliion’s strategy in general.
I suppose, then, that not everyone has what it takes to be a successful HYLN stock investor. But for anyone willing to stay calm and hold for the long term, returns could be substantial.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.