XL Fleet Is Ready to Meet the New Focus on Climate Change

XL Fleet (NYSE:XL) is one of the companies that went public via a special purpose acquisition company (SPAC) in 2020. XL stock is trading on the New York Stock Exchange. After climbing to more than $32 per share in December 2020, the stock has been steadily declining.

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That’s not unusual for newly public companies. And trading at around $18 per share as of this writing, investors seem to be following the advice of CNBC’s Jim Cramer. The host of the network’s Mad Money suggested the stock may have been a steal at $15 but cautioned them not to chase it above $20.

But I’m getting ahead of myself. If you’re like me, you may be late to the party on XL Fleet. The company competes in the electric vehicle sector. XL Fleet manufactures hybrid and plug-in powertrains that can transition traditional gas-powered vehicles into hybrids.

XL Fleet has other competitors in this arena, notably Hyliion (NYSE:HYLN). When I wrote about Hyliion in January I said that the story was just getting interesting. In the case of XL Fleet, the company’s products are already being used in select Ford (NYSE:F), General Motors (NYSE:GM) and Isuzu (OTCMKTS:ISUZY) fleet trucks.

This gives XL Fleet some interesting case studies that makes XL stock an intriguing play particularly as the environment is about to become a hot topic again.

Climate for EVs Is Changing

As the curtain rises on the Biden administration, climate change is making a return to the stage. In fact, probably by the time you read this the United States will have re-entered the Paris Climate Accord. But a couple of interesting things happened since the previous president took the oath of office.

First, the global pandemic led to a 10% drop in greenhouse gas emissions, the largest annual drop since World War II, according to the Rhodium Group. But the group warns that this is largely a one-off based on the lockdowns.

Fair enough, but consider this as well. According to the Environmental Protection Agency (EPA) carbon emissions in the U.S. steadily decreased over the past few years. In terms of raw carbon emissions reduction, the United States is outpacing every other country in the world. And even though our emissions have not fallen as much on a percentage basis, it still suggests that the United States hasn’t been ignoring the environment.

I’m not trying to make a political statement about climate change. My takeaway is that our country’s transition to a carbon neutral future is happening because technology has risen to meet the challenge. The reality is that a movement away from fossil fuels is potentially big business.

And that is great news for investors in XL Fleet.

The Story of XL Stock Is Being Written

It’s not unusual for stocks to become volatile after going public. This has been particularly true of companies that came to market via a SPAC. As such, my advice is to nibble now and look to buy more when the lock-up period ends.

In the case of XL Fleet, its lock-up agreement could be as long as 12 months from the consummation of the merger (December of this year). However, the language in the company’s 8-K filed with the Securities & Exchange Commission suggests that the lock-up period could end in early summer if the XL stock price closes above $15 for 20 consecutive trading days in a 30-day trading period.

The good news is that more time allows for more to be known about the company and its plans. And that’s good advice for any of these SPAC stocks.

On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.

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