Twin Ridge Capital Acquisition (NASDAQ: CREV) stock is listed on some tickers as being up 1,700% and more. Which is really rather impressive for an IPO from Friday., Or, more accurately, A Spac company merger - and thus despac - that took place on Friday. The real stock price is up, indeed it is. But nothing like 1,700%. What’s happening is a confusion between real and nominal price changes which is feeding a momentum trade. Once everyone grasps that nominal effect we expect much of the excitement to fade away.
Twin Ridge merged with Carbon Revolution to create the now listed CREV: “Carbon Revolution, which is looking to merge with Twin Ridge Capital Acquisition (NYSE:TRCA), Monday said it entered into a structured equity facility of up to $110 million with two fund vehicles associated with Orion Infrastructure Capital. Carbon added that the facility brought the expected capital available with Carbon Revolution towards its proposed business combination with Twin Ridge to about $230 million.” All fairly standard despac machinations.
The actual business seems reasonable enough: “Carbon Revolution wheels weigh up to 50% less than comparable aluminum wheels, and can provide an up to 5% to 10% increase to EV vehicle range.2 As the Company announced on August 31, it has been awarded a further 5 programs since August 2022 – including the first 2 for electric vehicles (EVs) – taking the total number of programs awarded to 183 with six global OEMs, including Ford Motor Company, General Motors Company, Renault, Ferrari N.V. and Jaguar Land Rover.”
Not perhaps what speculative dreams are made of but interesting enough.
Twin Ridge Capital stock price from Google Finance
However, there’s one more thing to add here, something that’s not being taken into account:
“Carbon Revolution effectuated a 10-to-1 share consolidation through the exchange ratio at closing of the business combination. The result of the 10-to-1 TRCA share consolidation on closing is that a CREV price of $100.00 is reflective of a TRCA price of $10.00 per share, consequently a CREV price of $78.70 per share is reflective of the closing price of $7.87 per share of TRCA on the day prior to closing.”
At our pixel time the quoted share price is powering through $275. Which we are absolutely certain is a momentum trade confused by that consolidation - not taking account of that consolidation. Sure, the real price is indeed up. But by nothing like the 1,700% that the tickers seem to have it at. We do expect the excitement to fade soon enough therefore.
