EVTV Stock Soars on Plan to Acquire AI Firm for $480 Million
The struggling electric vehicle maker, with a market cap under $2 million, seeks a radical pivot into AI with a deal that values the target at over 200 times its own size.
Shares of Envirotech Vehicles Inc. (NASDAQ: EVTV), a micro-cap electric vehicle manufacturer, skyrocketed in recent trading following the announcement of a non-binding letter of intent to acquire AZIO AI Corporation. The proposed deal, which values the AI infrastructure firm at an eye-watering $480 million, signals a dramatic strategic pivot for the beleaguered EV company.
Investors reacted with speculative enthusiasm to the news, sending EVTV shares surging nearly 60% on Tuesday. The move is particularly striking given Envirotech's market capitalization of less than $2 million prior to the rally, making the planned acquisition more than 200 times the company's own valuation.
The transaction, should it be completed, would represent a total transformation of Envirotech from a manufacturer of zero-emission commercial vehicles into a player in the booming artificial intelligence sector. According to an amended agreement detailed by the company, EVTV would acquire 100% of AZIO AI’s equity. The framework for the deal includes a reference value of $3.00 per share for EVTV's common stock, a stark contrast to its recent trading price, which languished near a 52-week low of $0.33.
AZIO AI specializes in high-performance computing (HPC) and AI infrastructure, developing scalable AI compute platforms and enterprise-grade GPU servers utilizing technology like NVIDIA's H100 chips. The company also offers 'Compute-as-a-Service' (CaaS), a high-demand area as businesses scramble for computational power to run AI models. Upon the deal's closing, AZIO AI's Chief Executive, Chris Young, is slated to become the CEO of the combined entity, further cementing the shift in corporate direction.
For Envirotech, the move follows a period of immense struggle. The company, which operates a manufacturing facility in Osceola, Arkansas, has seen its stock price collapse from a 52-week high of $14.00. Financial data reveals a company with negative profitability and an EBITDA of approximately -$12.26 million, according to its most recent filings. The pivot to AI appears to be a high-stakes attempt to abandon a capital-intensive and competitive EV market for the high-growth, if not equally competitive, AI landscape.
While the market's initial reaction has been explosive, the deal remains fraught with uncertainty. The letter of intent is non-binding, meaning there is no guarantee the acquisition will be finalized. Furthermore, structuring a deal of this magnitude will likely lead to massive shareholder dilution for current EVTV investors. The challenges of integrating and funding an operation valued at nearly half a billion dollars will be a monumental task for a company of Envirotech's current scale.
Nonetheless, the announcement has single-handedly put Envirotech Vehicles back on traders' radar, transforming it overnight from a struggling EV maker into a speculative AI play. The coming weeks will be critical as investors watch for any signs of a definitive agreement and further details on how the company plans to finance its radical, new ambition.