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TPG Pace Beneficial Finance Is Getting Riskier

InvestorPlace logo InvestorPlace 6/22/2021 Josh Enomoto
a close up of a car: KIA electronic vehicle charging © Source: VanderWolf Images / Shutterstock.com KIA electronic vehicle charging

Electric vehicles are the future. This is one of the new mantras that society requires you to believe, with some consequences if you don’t. So, it’s understandable why so many people are eager to place a wager on TPG Pace Beneficial Finance (NYSE:TPGY) stock.

a car parked in a parking lot: KIA electronic vehicle charging © Provided by InvestorPlace KIA electronic vehicle charging

TPGY stock represents a special purpose acquisition company that targets EVBox, a Dutch EV charging station provider.

On the one hand, TPGY stock attracted significant interest early on as the rumor mill got underway because of multiple factors. Key among them is the political tailwind. While the loudest voices on the internet seemingly are upset that President Joe Biden won the 2020 election, here’s the upside: with Democrats controlling the legislative branch (albeit tenuously), the left can push its pro-climate agenda, which includes EVs.

With the rest of the world seemingly recognizing that we must do something to stop climate change, TPGY stock sits atop what could be an incredibly transformative movement. No matter where EVBox ends up expanding to in the future, prospects seem bright.

Of course, nothing is ever so simple, which is why investors should be very careful before taking a gamble on this SPAC.

Political Winds Turning Unfavorably Against TPGY Stock

You know how sometimes you’ll remember the most random things in your past with clarity, while the other events around it are lost in a haze? For me, the one piece of information I remember from my high school economics class is that there’s a difference between want and demand.

Want is easy. Want is cheap. Everybody wants something. But demand is a different animal altogether. Under this concept, you’re referring to people who are ready and willing to purchase a product or service. And it’s the same with the bigger picture regarding TPGY stock.


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I believe our own Chris Markoch really hit the nail on the head with his take on the SPAC. Referencing that the EV puzzle isn’t just scientific nor economic but also political, Markoch wrote:

It would seem unlikely that the Biden administration will be able to pass its entire $6 trillion budget. The $2 trillion infrastructure plan that includes funding for EV charging stations will likely get pared down. All of this is to say that there may not be the will to pass generous subsidies. Even if they did, the United States does not have nearly the supply to match such a demand.

Politicians supporting an EV future can talk all they want about wanting a clean transportation infrastructure. But resources are limited and how they are allocated is certainly influenced politically.

Right now, want for EVs and related infrastructure is sky high. But demand is unfortunately low, hurting the narrative for TPGY stock.

Will the SPAC Even SPAC?

In recent months, we’ve seen several hyped SPACs sputter badly, particularly as dilutive actions such as warrant exercising took their toll. Sadly, that’s one of the major risk factors associated with blank-check firms.

But the counterargument, I suppose, is that at least these SPACs got to do their thing. As InvestorPlace contributor Robert Lakin reported, at least a mild risk exists that either the SPAC sponsor or EVBox could back out of the deal. Still, he was careful to note that pulling out wouldn’t make much sense.

I’m not going to disagree with him. At the same time, this just highlights another issue with these SPACs and TPGY stock in particular. Should the global economy take a turn to an unpleasant trajectory, even European markets that are much more attuned to EV infrastructure buildouts may start to get the cold feet that we in the U.S. are experiencing.

To me, too many variables have popped up for me to be comfortable with TPGY stock, whether completes its SPAC deal or not.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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