Jim Cramer: Electric truck company Hyliion has a compelling story, but be patient on the stock

  • CNBC's Jim Cramer advised investors to hold off on buying shares of newly public electric truck company Hyliion Holdings.
  • The "Mad Money" host stressed he found the company's story compelling but worried about its present valuation.
  • "I kind of like the story, and I think it's worth buying if you can get the stock around $20, maybe less," he added.

CNBC's Jim Cramer said Thursday that newly public electric truck company Hyliion Holdings has a compelling business strategy, but he cautioned investors against chasing the stock at its current levels.

Hyliion, which completed its reverse merger with a special purpose acquisition company earlier this month, saw its stock close Thursday's session down 3.15% to $28.27 per share.

"I kind of like the story, and I think it's worth buying if you can get the stock around $20, maybe less," the "Mad Money" host said. "Please, be patient — let it come to you."

Cramer has largely been skeptical of the influx of electric vehicle companies merging with blank-check companies known as SPACs, beginning first with Nikola in June. Other announced deals include Spartan Energy Acquisition's merger with Fisker and the combination of DiamondPeak and Lordstown Motor.

"This is absolutely nuts, and I say that as someone who really, firmly believes in electric vehicles," Cramer said, noting his support for industry leader Tesla. "I think fossil fuels are on the way out. … But I also think you need to be careful with these relatively early stage startups getting big cash infusions from SPACs."

For Hyliion, in particular, Cramer said he believes there are a lot of positive catalysts for the company, which develops powertrain systems for both hybrid and fully electric trucks. He said he likes the fact its hybrid solution, which can be retrofitted on existing trucks, is already on the market and takes advantage of existing infrastructure for compressed natural gas. It also owns its battery technology, which is a plus, he said.

"On the other hand, Hyliion's not exactly doing something revolutionary here, as we already have trucks that run on natural gas," Cramer said. "Nobody really likes them other than some of these waste companies."

But ultimately, Cramer said Hyliion's strategy of focusing on powertrain systems is a smart one. The company, he said, "figured out that designing a new truck was a fool's game."

"You've already got truck makers with lots of capacity and happy customers," he said. "They realized they had a better shot at simply improving those trucks with a new and improved powertrain, rather than starting from scratch. Makes sense."

The company also has plans for the Hypertruck ERX, which replaces the standard diesel engine with an army of batteries that can recharge onboard with tanks of compressed natural gas. And more long term, Cramer noted Hyliion has expressed interest in hydrogen fuel cell technology, which the host is bullish on although it remains in its nascent stages.

As for its financials, Cramer said the company thinks it can sell 4,100 hybrid powertrains in 2022 and 2,500 of the Hypertruck ERX systems, with a total revenue projection of $344 million. "Very impressive considering they only expect to make $8 million next year," Cramer said. "These numbers seem optimistic to me, but if they come anywhere close, well, it would be very positive."

Compared with other early stage electric vehicle companies, Hyliion does feel "much closer to being a reality," Cramer said. However, he said investors should be wary of the stock price. It is his biggest concern right now, he said.

In late September, when the merger with Hyliion was approved by the board of the SPAC, Tortoise Acquisition, the stock was trading in the low $50s. Now, it's fallen back below $30.  

"The darned thing got way too hot for its own good," he said. "The bottom line? Given the trajectory of these SPAC deals, I'm betting Hyliion will have more downside before it bottoms."

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