Innoviz/CGRO Merger Play --> Will History Repeat Itself?!CGRO is expected to complete its merger with Innoviz (INVZ) technologies in the first quarter of 2021. If that timetable is to be believed then we are only looking at 1-4 month timeframe for the merger to occur. Innoviz is a lidar sensor play - think VLDR and LAZR . After analyzing VLDR/LAZR who are the well known tickers in this sector it looks like Innoviz could have a similar rally as the merger gets closer. Semi-recent news is that INVZ has partnered with Macnica (japan's largest distribution company) to sell its InnovizOne for the first time in Japan. InnovizOne has also been selected by BMW for its use in its fully autonomous electric car. Innoviz has some solid investors that interest me. They are backed by Softbank Ventures Asia and auto supplier Magna international. Magna international is one of the world's largest suppliers in the automotive industry and is the largest auto parts manufacturer in North America. So, seeing them invest millions into Innoviz is something to keep an eye on in the North American sector.
Chart :
What has drawn me to CGRO's chart is the 32% sell off over the past 44 days which may be finding a bottom at the $13 range. It held the Daily 50 SMA beautifully for 6 days straight which piqued my interest as well.
- HVN: there is a HVN between $13-14 and we saw a fail of this lvl on 1/25-1/29 but then we regained the $13 lvl which was key. The POC is at $13.78 which will serve as a strong resistance. If we can close over the POC then I am really bullish on the trade.
-Volume: there isn’t much special about the volume CGRO has seen the past 43 days as it has been mostly bearish with its sell off.
- Important to note the bullish price action this past week vs the declining volume, might be signaling another leg down unless $ steps in this week.
- 1/25 & 1/26 we saw 1.1 and 1.5 million volume with bearish candles both days. It looks to me like a failed bounce and subsequent gap down. Since these two days there has only been one larger volume day on 2/2 of 1.1 million.
We had some bulls come into CGRO that day and try to reclaim the daily 20 SMA but were unable to close above.
- MACD: CGRO’s MACD on Daily chart looks primed for a reversal, VLDR Daily chart also saw very similar MACD & RSI patterns before its merger rally
Merger :
- VLDR ran 148% the month leading up to its merger while LAZR hit 80% gains a few days before its merger and 150% gains the 4 days prior to its merger
- I am by no means saying this is going to happen to Innoviz. If anything this shows that the lidar market is becoming saturated with companies going public. LAZR by comparison has a market cap of 10.8 billion and VLDR of 3.92 billion.
The merger results in Innoviz with an estimated $1.4 billion equity value.
- I am looking at these comparisons and think there may be a possibility here for a INVZ run up into its merger. The tricky thing about this play is timing.
Plan:
I am currently in a small starter position of CGRO at $13.37 and this week I will be looking to continue to add shares. Once we get some momentum I am also looking to add some March or April calls.
1. If CGRO continues to see no bullish volume I think we retest the triangle bottom trend line and might even see the $11.60-12 range where the other HVN is located (lower blue square on chart). If this is the case I will watch for a bounce at this HVN and/or the 100 SMA.
2. I want to see CGRO hold its $13-$14 HVN range and close over the 20 SMA on the daily chart. With such a long consolidation and merger news imminent I am adding a starter position and then waiting on volume accumulation to add a larger position.
SL: If we fail the triangle pattern and look to be heading to the 11.60-12 range then that is a good opportunity to take the loss and re-enter lower. I have a smaller position so I am comfortable holding my shares through this breakdown if it occurs. I will more than likely avg down if these levels are seen.
***Downside: - Other Lidar plays that have SPAC’s supposedly merging in the first quarter are Ouster ( CLA ) and Aeva ( IPV ). The Lidar market will quickly have multiple companies joining via SPAC’s in the first half of 2021. This saturation can make it tricky for just one company to run. This writeup focuses on INVZ but a diversification of 2 or more of these Lidar plays may be more risk averse.
Thanks for reading my write-up if you made it this far! would love to hear your thoughts on this play/sector. Give me a like and follow on TV for future trade ideas.
IPV
Aeva to Be Listed on NYSE through Business Combination with IPV Aeva, Maker of the First 4D LiDAR on Chip, to Be Listed on NYSE through Business Combination with InterPrivate Acquisition Corp.
-Aeva Inc. (“Aeva”) is the leading provider of comprehensive perception solutions developed on Silicon Photonics for mass scale applications in automotive, consumer electronics, consumer health, industrial and security markets.
-Aeva’s groundbreaking 4D LiDAR on Chip combines instant velocity measurements and long-range performance at affordable costs for commercialization at silicon scale.
-Aeva has received strategic investments from Porsche SE, the major shareholder of VW Group.
-Aeva’s commercial partners also include other top automotive OEMs and world’s leading mobility and technology players.
-In September, Aeva announced a production partnership with ZF to manufacture and distribute the first automotive grade 4D LiDAR to global OEM customers.
-Business combination to provide up to $363M in gross proceeds, comprised of InterPrivate’s $243M held in trust and a $120M fully committed common stock PIPE at $10.00 per share, including investments from Adage Capital and Porsche SE.
-Combined company expected to have an estimated post-transaction equity value of approximately $2.1B and is expected to be listed on the NYSE under the ticker symbol AEVA following anticipated transaction close in Q1 2021.
-All Aeva stockholders, including Lux Capital, Canaan Partners, and Lockheed Martin, will retain their equity holdings through Aeva’s transition into the publicly listed company.
-Aeva plans to use 100% of the net proceeds from the transaction to accelerate its growth and commercialization.
Transaction overview
The combined company will have an implied pro forma equity value of approximately $2.1 billion at closing, and Aeva’s existing stockholders will hold approximately 80% of the issued and outstanding shares of common stock of the combined company immediately following the closing.
Cash proceeds in connection with the transaction will be funded through a combination of :
(i) the issuance of approximately $120 million of common stock through a fully committed private placement at $10.00 per share, including investments from Adage Capital and Porsche SE,
(ii) the issuance of $ 1.7 billion of new common stock of InterPrivate to current stockholders of Aeva subject to customary adjustments and
(iii) $243 million of cash held in trust assuming no redemptions by InterPrivate’s existing public stockholders.
Completion of the proposed business combination is subject to, among other things, the approval by InterPrivate and Aeva stockholders and the satisfaction or waiver of other customary closing conditions , including a registration statement being declared effective by the Securities and Exchange Commission (the “SEC”), and is expected to occur in the first quarter of 2021.
ipvspac.com stock
