Shares of special purpose acquisition company (SPAC), Tuscan Holdings Corp. (THCB) plummeted on Tuesday, and there’s no clear reason to explain the drop. Investors may be becoming increasingly bearish about the company due to a couple of factors. However, those explanations cannot explain today’s rally. Nevertheless, Tuscan Holdings stock was up +11.92% to $16.06 as of 7:33 a.m. EST.
So What’s The Deal With The Stock?
Founded in 2018, Tuscan Holdings was created with an intention to merge, acquire, stock purchase, recapitalize, reorganize or form other business deals with other companies or entities. Tuscan Holdings has not made any significant investments since its initial public offering in March 2019.
The quest ended last November when Microvast was found by the company, which was seeking an IPO through a SPAC. Tuscan Holdings will surely perform well given the integration of battery development firm Microvast with the SPAC and there have been some good performances by SPACs in the electric-vehicle market as well.
However, until now, the focus is on the transaction’s potential. Tuscan is in a very unusual position compared to SPAC practices, with the acquisition target revealed, but the deal specifications have not yet been disclosed. Two months after the signing of the letter of intent, there was no further information.
The stock price went through several twists and turns since the announcement and currently stands at a rise of nearly 13 percent as of Tuesday’s closing price of $14.35. Tuscan Holdings shareholders voted on Dec. 3, 2020, to approve the extension to complete their business combination with Microvast from Dec. 7, 2020, through April 30, 2021.
Ultimately, and maybe most notably, no one has any idea what the merger’s assumed value would indeed be. An estimate of about $2 billion was reported by Bloomberg, but the interruption in the formal confirmation of the transaction indicates there could be some dispute on this one.
In this scenario, today’s premarket gain shows that investors are still optimistic about Tuscan Holdings Corp. (THCB) concluding the transaction successfully.