A lingerie maker's stock is soaring on a deal to merge with an EV manufacturer

• Naked Brands stock soared as much as 30% on Tuesday after the company announced a merger with Cenntro Automotive.
• The lingerie maker is pivoting to electric vehicles as investors look to find the next Tesla.
• Cenntro develops electrified commercial vehicles and has sold more than 3,000 units to date.

Naked Brands, a lingerie company that sells its products under the Frederick's of Hollywood brand, is merging with an electric vehicle manufacturer.

Naked's stock jumped as much as 30% on Tuesday following the merger announcement, which will bring Cenntro Automotive public.

Cenntro shareholders will own about 70% of the combined company on a fully-diluted basis once the transaction closes. The combined company will have about $282 million in cash, and Naked plans to sell its Frederick's of Hollywood lingerie brand to focus on the electric vehicle opportunity.

The move comes as electric vehicle companies see strong demand from both its customers and investors, as many seek to replicate the success of Tesla. Cenntro is focused on selling commercial electric vehicles and has sold more than 3,000 vehicles since its founding in 2013.

Cenntro thinks it can scale up production quickly. The company says it is on track to generate $25 million in revenue in 2021 on the sale of 1,500 vehicles, and expects a nearly 20-fold boost next year to more than $500 million in revenue on the sale of 21,500 vehicles. Cenntro said it expects to then quadruple its estimated 2022 revenue to $2.1 billion in 2023.

Those revenue projections are akin to the far-fetched financial projections made by a number of companies going public via SPAC over the past year, which Cenntro opted out of doing. But Cenntro's transaction is similar to a SPAC in that it is reverse merging with a publicly traded company, which requires less scrutiny and disclosures than a traditional IPO.

"We looked at many options for going public. While we confidentially submitted a draft S-1 to go public via an IPO, we came to believe that Naked allowed us to go public faster," Cenntro CEO Peter Wang said, adding that the cash raised from the transaction will help the company work through its backlog of orders.