Twin Vee Powercats (VEEE) – Spin-Off – 50%+ Upside

Current Price: $3.92

Target Price: $6.00+

Upside: 50%+

Expiration Date: Q2-Q3 2022


This is a puzzling situation with substantial upside and a clear-cut catalyst if management’s spin-off IPO plans work out as intended. It’s far from certain the spin-off will actually happen, however, downside appears to be limited at current prices.

Twin Vee is a powered catamaran boat manufacturer operating since 1996 and counting government entities among its customers.  The company IPO’ed in Jul’21 raising funds to develop electric motorboats. Just half a year later Twin Vee unexpectedly filed to list its electric boat business as a separate entity (Forza X1) aiming once more to raise funds for the development of electric motorboats, while retaining the previously raised cash funds with the parent.

VEEE market cap stands at $27m with $15m in cash leaving only $12m value for the boat manufacturing business. Forza fillings indicate ambitions to raise up to $29m with half of subsidiary retained by the company. That might be wishful thinking on management’s side, but if it turns out to be directionally correct, then investors are getting the whole current market cap for free.

In a way, this is a cheap/free bet that the market still has the appetite for EV stocks and that the subsidiary IPO will go through successfully.

Chairman/CEO owns 32% of VEEE (or 56% through a controlled entity) so interests should be well aligned.

So far only the first S-1 for Forza has been filed and no public comments/announcements have been made by the company. Assuming a similar 4-6 months timeline as for VEEE IPO itself, Forza listing could be expected in Q2-Q3 2022.

The situation exists probably due to Twin Vee’s small size, lackluster share price performance post-IPO (down 33%, in line with peer VMAR), as well as uncertainties surrounding the upcoming IPO and management’s ambitious plans. Another possibility is that the market had a look at this and has already completely written off any chances for the subsidiary IPO to happen.


Legacy Business

Twin Vee PowerCats manufactures 11 gasoline-powered (and one more expected shortly) recreational and commercial twin-hull boat models with price ranges from $65k to $900k. It is a stable business with a recognizable brand name that has been growing at 16% CAGR since 2016. The manufacturing base is in Fort Pierce Florida – 7.5-acre facility with several buildings totaling 75k sq. ft. Recently the company signed a purchase agreement for a 14.5 acre parcel near waterfront where it intends to develop 100k sq. ft. manufacturing facility (intended for Forza’s use). VEEE sells boats through a network of 10 independent dealers with 14 locations in NA and the Caribbean.

The company went public in July’21 – the slightly upsized offering was priced at the upper limit of the $5-$6 range. Twin Vee raised $16m in net cash, most of which is still on the balance sheet. Parent retained 56% stake.

VEEE itself did disclose financials older than 2019. The figures for years 2016-2018 were taken from its parent (TVPC) OTC financial reports. For these earlier years revenue GP numbers are for boat business only, however opex and income figures might have been somewhat affected by parents remaining tiny real estate operations that were fully wound down in 2020. Also worth noting that year 2020 was positively impacted by the $0.6m PPP and $0.5m SBA loan forgiveness.

VEEE financials 1

VEEE started developing electric vehicle designs in 2020 and the electric propulsion system in early 2021, thus the results of the legacy business are somewhat impacted by the investment in the electric segment – Forza’s S-1 shows expenses of $230k in eleven months ending Nov’21. Once Forza is seperated, these investments/expenses will be off the VEEE books. Recent quarters have also been impacted by the supply chain issues, which is likely the reason why the business showed limited operating leverage despite strong revenue growth from $11 to the current $14m (similar trends observed for the other motorboat manufacturers such as MBUU, MPX, MCFT and BC). Supply chain normalization is expected to result in improved margins across the industry.

All of this is meant to show that Twin Vee legacy business is quite likely to operate above breakeven going forward. Current EV ($12m) is so low, that even with a small profitability at conservative multiples this threshold would be easily exceeded – e.g. $1m in net profit at 15x. In other words, if Forza’s IPO scenario does not materialize, the existing business valuation seems to fully protect the downside.


Forza IPO

VEEE’s electric boat segment is currently developing 6 electric models and is working on its own proprietary outboard propulsion system (150 HP), which will be compatible with other third-party brands of recreational and sport watercraft boats, including twin-hull catamaran boats and monohull style boats.

The planned IPO of Forza is somewhat puzzling and it is hard to imagine the listing raising anything close to $29m max sum indicated in the filling. But crazier things are happing in this market on a daily basis – while reading the below also keep in mind that at current prices investors are not paying anything for this incremental Forza listing optionality.

VEEE completed its own IPO just 6 months ago, in July’21, posing itself as one of the first movers in the electric boating segment. Out of $16m raised funds $12m were supposed to be allocated towards the development of the electric boat business. 6 months later Forza’s S-1 shows that only $2m of these previously-raised funds are intended to be transferred to the spin-co. Investments into the segment so far also appear to be limited – the 11 month (ending Nov’21) Forza opex is only $230k. So instead of using July’s IPO proceeds for EV motorboat development, management now wants to raise substantially more funds through the IPO of Forza, essentially for the same purpose. VEEE still holds around $15m cash and it is not clear how these funds will be utilized. Might be that subsequent Forza fillings will show far larger fund transfers from parent to spin-co.

During Twin Vee IPO it was estimated that the electric division will need approx. $3.5m for the acquisition of waterfront property and development of its electric propulsion manufacturing and testing facility. The recent Forza’s filing now says it estimates that purchase/development of the facility will require $11m (which relates to the already signed land purchase agreement, the land itself accounts only $0.75m). Maybe management figured out that they need a much larger/more advanced facility – the initial IPO had limited little details, while Forza’s statement now says the planned size is 100k sq. ft. However, the whole thing seems a bit off here and it could negatively impact Forza’s IPO.

On top of questionable investment requirements and unclear usage of previously raised funds, Twin Vee is already late on its IPO promises regarding the development of both legacy gas-powered models and electric ones. Obviously not a great setup to go back to investors to ask for more money. July the company planned to roll out its new gas-powered GTX 340 and GTX400 models by Q4’21. While GTX340 manufacturing started in Nov, the production of GTX400 has been delayed to Q2’22. On the electric model side, IPO presentation showed VEEE having 6 electric models in development, while the design phase for the proprietary propulsion sytem had been completed and the prototype testing was underway. The company was planning to begin production of its two main prototype electric boats (240 and 280 Electric) in Q4’21. So far, the only news was the release of computer design pictures of a new FX1 model in December (apparently the redesigned 240 Electric model). Forza’s S-1 doesn’t shed any additional light on this – says that the company is still working on its two main prototypes. These delays on new model/development production might have been caused by the supply chain issues, however, these had likely been known at the time of Twin Vee IPO already.

Finally, I think it is obvious that the company is trying to play Tesla’s card to attract the attention of salivating EV investors (from Forza S-1):

Both FX1 models will have advanced high-powered, liquid-cooled battery packs and a vehicle control unit with proprietary control software all integrated into a 22” master control touch screen that will be used to control most functions of the boat.


Forza X1 will utilize a web-based and app platform to connect with customers for an end-to-end experience encompassing everything from buying, financing, delivery, servicing, and training. This customer-centric approach to sales and service aims at simplifying access to necessary information for potential buyers and current owners alike. With no independent dealers, intermediaries or brokers, customers will be able to communicate directly with Forza X1 to ensure their questions are answered and their needs are met.

Even some picks of Forza X1 are not dissimilar from the cybertruck (maybe to my eyes only):

Twinn Vee Forza X1

Not sure if the changed/new brand name, new design of a few boats, touch screen control panel, and a direct-to-consumer sales channel will be enough to persuade the investors to put cash on the table again.

But let’s give Forza the benefit of the doubt and assume that the companymanages to finalize the propulsion system and will start production of the first electric boat prototypes over the next few months. Yesterday’s announcement on the 5-year battery supply agreement ads some confidence to this.

There are several reference points regarding potential Forza valuation:

  • Forza S-1 filling has an indicated max offering price of $29m for 52% stake to be sold in Forza.
  • The closest peer VMAR, which is also a pre-revenue electric propulsion system/electric boat manufacturer currently trades at $40m (IPO valuation was $75m). VMAR develops single-hull boats. The company is probably a little more advanced compared to Forza in terms of product development and already has a partnership with Limestone (boat manufacturer) who will purchase electric systems from VMAR (initial order for 25 only).
  • Another peer (private), Pure WaterCraft that also seems to be in somewhat similar stage to Forza (commercial manufacturing hasn’t started yet) received a $150m investment from GM in November for a 25% stake, valueing the company at $600m. Pure WaterCraft is developing much smaller outboards – 25-50HP (vs 180 HP for VMAR and 150 HP for VEEE), but already has two available products (small rigid inflatable boats) available for sale.

Admittedly, all these numbers seem quite high given that we’re talking about a pre-revenue company (Forza) that is still working on the first prototypes. However, both peer examples suggest that the $29m max offering price for half of the company might be reachable if management can pull off this transaction. That’s an incremental $4.00 per VEE share for the retained part of the spin-co in what I would call the-most-optimistic scenario. And again, investors are not paying anything today for this optionality – current market cap is fully covered by the existing cash balance and valuation of the legacy gas-powered boat business.

To add at least a bit conservatism to Forza hype I will be more than happy if upon the completion of listing (or while waiting for it to happen) VEE shares simply revert back to IPO levels of $6 – meaning Forza is valued at 50% discount to currently indicated figures in the S-1.


A cheaper way to acquire VEEE

J. Visconti holds VEEE through Twin Vee PowerCats, Inc. which is listed on pink sheets as TVPC.TVPC owns 4m of VEEE shares. Previously TVPC used to have some RE operations but has gradually disposed of these after acquiring Twin Vee in 2015. Currently, the vehicle is just a holdco for VEEE. It seems that public costs and overheads are minimal. Nonetheless, TVPC trades at 27% discount to VEEE and in August’21 promised to distribute its VEEE stake to TVPC shareholders after the lock-up expiration (1 year). So theoretically, TVPC is a much cheaper way to play VEEE, however, the public float is only 4% and the liquidity is extremely limited. Another interesting thing is that the discount has appeared only recently and for most of the time after VEEE IPO, TVPC actually used to trade at a significant premium.

tvpc veee discount



19 thoughts on “Twin Vee Powercats (VEEE) – Spin-Off – 50%+ Upside”

  1. Must be something basic I’m missing, but how is TVPC trading at a big discount to VEEE? TVPC owns 4.000.000 VEE shares, worth about $4.00, so 16M in total. TVPC has 166.712.509 shares outstanding. That adds up to $0.096 per share, which is basically where it’s currently trading. Where am I going wrong?

    • TVPC is an illiquid stock that fluctuates on $100 trades, yesterday the price went up from $0.07 to $0.1 (+40%), which makes the difference between my statement and yours.

      We added this mostly to show that the company already has 2 listings and now is in the process of creating the third.

      • there were related party transactions like lease of office from Visconti and shareholders loans and they run losses and were delisted from NYSE. Does not have to mean anything for the new capital here, of course.

  2. Forza X1 published an amended S1 filling, so the spin still seems to be on track. Company provided more detailed plans on the new factory (construction to be started in Dec’22 and completed by Aug’23), production start timelines and tried to shed some more light wy it is running another fund rise so quickly after the IPO of Twin Vee.

    A couple of the additions to the original filling are highlighted below:

    We plan to complete the initial prototype boat by Q2 2022 and to commence commercial scale production in Q2 2023
    To date, Forza X1 has received $2,000,000 in capital contributions from Twin Vee which funds we have used for the design, development, testing, production and marketing of our electric boats and electric outboard motors. Until such time as we receive proceeds from this offering or we generate revenue from the sale of our electric boats, we anticipate that we will continue to receive funding from Twin Vee. By funding Forza X1, Twin Vee intends to use its IPO proceeds for the design, development, testing, production and marketing of electric boats and electric outboard motors and, by continuing its efforts to acquire a waterfront property in Fort Pierce, Florida for development of an EV Testing Center, Twin Vee intends to further support Forza X1. We have received increased indications of interest in our electric boats and based upon such increased interest, we believe that the Twin Vee manufacturing facility will not have sufficient capacity to allow for full scale production of Twin Vee’s gas powered boats and our electric boats and therefore a new electric boat manufacturing facility is needed, which was not anticipated at the time of the Twin Vee IPO. As a result of the increased capital markets interest in EV vehicles, the interest expressed by consumers for our electric boats and recent high-profile initial public offerings of EV vehicle companies which followed the Twin Vee IPO, Twin Vee determined that there may be an opportunity for Forza X1 to raise funds as a stand-alone entity through this Offering.

  3. Twin Vee reported record revenues of $5m+ for Q4’21. Profitability was not as impressive as was negatively impacted by the investments into capacity expansion, new models and electric boats. The uptick in sales should position the company better for the spin-co capital raise.

    Forza spin-off (the key point for the investment thesis to play out) still seems to be on track – Forza X1 issued the second revision to S1 filling. From the changes made it seems that SEC is asking for more detailed explanations for the spin and additional raise of capital and how the purpose of to be raised funds differs from the one at the time of IPO. No further details on the valuation of the spin-co have been provided.

  4. Twin Vee released strong Q1 earnings with revenues up 83% YoY and 15% sequentially. The main drivers were continuing strong demand, expansion of dealer network, and newly added GFX models.

    As for the outlook for 2022, the company expects to break even on the gas boat division but continues to incur losses in the electric boat division due to R&D costs.

    VEEE had $11m of cash and an EV of $12m.

    Forza’s IPO remains on track and seems to be progressing well. The only thing is that management wants the market to stabilize a bit before starting the roadshow, so it’s not clear how long this delay might take. From the conf. call:

    Yes. Hi. Thanks for taking my question. Just wonder if you could give me an update on the Forza IPO.

    Sure. So, the good news is that the SEC gave us a no-comment letter about two weeks ago. We’re working with our bank, ThinkEquity, to refine our presentation. Obviously, the market is in a pretty rough condition right now. So, ThinkEquity is driving this process, obviously the lead bank on our deal. And what I’m being told, and I think we all know is, we need to start to see the market stabilize a little bit, and then we’ll begin our roadshow. But as far as going through the SEC and NASDAQ with our S1, that’s – we’re ready to roadshow. So, I think the good news is that with these higher gas prices, we see electrification happening all over the world in many different industries. So, hopefully, this market kind of like figures out what it wants to do so we can get public. But that’s not stopping us by the way. We continue to – Twin Vee has $11 million in the bank.

  5. Forxa X1 filed a new S-1 sheding some light on its upcoming IPO and other developments:
    – VEEE intends to sell a 30% stake in Forza with expected $12.6m in net IPO proceeds. At $5 offering price, the IPO would value the whole of Forza at $50m.
    – The company terminated previous land purchase agreement due to high costs and now plans to build a manufacturing plant in a different location. New facility will be smaller – 70k sq. ft. compared to 100k sq. ft. before. Construction costs are expected to go down from $11m to $8m.
    – On the business side, Forza started testing its electric outboard motor and control system in Q2.

    Overall, the IPO seems to be on track. VEEE’s EV is now deep into negative EV territory assuming management can actually pull off that offer.

  6. Closing out VEEE idea with 90% gain.

    Forza X1 started trading with a bang, up +130% on the first day. The market is clearly overly excited.

    By my count, 70% stake retained by VEEE is now worth $80m. On top of that, VEEE has another $10m in cash. This compares to VEEE market cap of $45m. So the company trades at 50% discount to cash + public securities, with zero value to fast-growing boat manufacturing operations.

    However, at the moment I do not see any possibilities to hedge FRZA exposure. And without hedge, the value of 70% stake in FRZA might evaporate quickly over the next few days. If hedging possibilities appear, I might reconsider, but most likely the spread will not be at the current levels by that time.

    For anyone able to find the hedge, long VEEE and short FRZA trade should work out nicely.

  7. FRZA Forxa ipo’d 3m shares today at $5, opened at ~$14, now ~$12!! Please correct my numbers: VEEE has 7m sh outstanding, owns also 7m sh of FRZA. Thus VEEE owns $12/sh worth of FRZA, less tax, + cash of $10million or $1.40/sh + its own business = ?? vs VEEE trading at ~$6.40 now. Seems VEEE is way undervalued here, even considering that FRZA price will be very volatile.

    VEEE has traded 54 million shares as of 12:25p, and TVPC has traded 5 million shares (normally trading zero to 10k shares daily), FRZA 10million shares vs 3mil sold in IPO. So it seems the Robinhooders are into these 3 related companies today since 4am. TVPC trading at 27c, vs around 15c value based on VEEE price of $6+, a big premium.

  8. VEEE up $2 to near $9 aftermarket 4:30pm, for those who have not sold! Night-traders on the go.

  9. As I noted in my Friday’s comment: “However, at the moment I do not see any possibilities to hedge FRZA exposure. And without hedge, the value of 70% stake in FRZA might evaporate quickly over the next few days” – seems like exactly that happened with FRZA down from $12/share to $6/share.

    VEEE now trades approximately at the value of the retained 70% stake in FRZA + $10 cash balance. While the market is still not attaching any value to the existing motorboat business, there is also unhedgeable exposure to further FRZA sell-off.

    I think this arb has now fully worked out and the spread is eliminated.

    • Thanks, DT. On Friday, I somehow missed seeing your post, and wrote my “way undervalued” comment. Later that day, I found your post and quickly exited my position. Obviously, I realized your judgment is better and more rational.

      • I think it was quite ‘undervalued’ relative to the sum of the parts at the time of your post. The only issue I had was that the FRZA part was/is quite speculative and it was hard to justify keeping exposure to it after 130% after-IPO spike. Someone with a strong belief in electric motorboats and Forza’s future might have a different opinion.

    • As per my comment above – the spread to the theoretical SOTP has widened again today, but I do not have confidence in FRZA valuation to keep unhedged exposure to it.


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