Helbiz (HLBZ) Stock Soars 20% on Merger News

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Helbiz (NASDAQ:HLBZ) stock accelerated more than 20% higher today after the company inked a merger agreement with Wheels. Shares of HLBZ have since calmed down from their initial climb, now up by just over 2%.

Founded in 2018, Wheels operates as a micro-mobility company with products like The Atlas and Wheels 2.0 sit-down scooters. The company currently operates in 12 cities and six colleges, from Los Angeles and New York City to UCLA. Wheels is also a safety-first company and provides users with helmets, brake levers and “self-sanitizing handlebars.”

The Helbiz-Wheels merger is expected to close next month and will be subject to standard closing conditions. Afterwards, Wheels CEO Marco McCottry will take over Helbiz’s North American micro-mobility business.

Helbiz CEO Salvatore Palella said the following about the deal:

“As a combined company, Helbiz will expand its access to markets –including the only operator to serve every L.A. neighborhood – further differentiate our business model, and extend our technology leadership. This merger creates an even stronger foundation to power our growth going forward.”

Palella has been extremely bullish on his company. Since the beginning of the year, the CEO has purchased 5.4 million shares of HLBZ stock.

HLBZ Stock: Helbiz Signs Merger Agreement With Wheels

Wheels has a user base of more than 5 million people, proprietary hardware, contracts with business to business (B2B) partners and intellectual property related to its shareable helmet system. The company also has a direct partnership with Uber’s (NYSE:UBER) Uber Eats; via a month-to-month rental program, Uber drivers can secure a Wheels vehicle with ease.

Importantly, this merger will also open up Helbiz to the Los Angeles market, as Wheels commands a strong presence there. Wheels CEO Marco McCottry added:

“With the combined resources and increased efficiency, we will be able to accelerate our personal and corporate long term rental business, bring Wheels to a global audience and build a path to profitability.”

Upon completion of the merger, Helbiz will boost its exposure to 67 markets around the world. Furthermore, the combined businesses are expected to bring in $25 million of revenue for 2022, which would double Helbiz’s 2021 revenue. Over the next nine months, the companies forecast positive gross profit margin. Over the next two years, they also expect operating profitability. The companies will achieve this by undergoing a restructuring plan with the goals of higher margins, lower costs of revenue and achieving operational savings through redundancies.

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On the date of publication, Eddie Pan did not hold (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.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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