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Could giant SPACs be next?

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Re: Could giant SPACs be next?

#61

Post by plouffy »

silexia wrote: post #30
legym wrote: post #24

Earlier quoted context omitted.

I've been following other boards, but saw this website floating around. Many of them have active excel sheets monitoring which ones have announced https://spactrack.net

A SPAC has no actual competitive edge in the market. They are literally all hype. As long as the stock market goes up, you probably will make money. But be very careful as if the market turns down, I think these will turn out to be worthless.

Given that when a SPACS find a merger target you can chose either to invest in it or get your money back with interest, I'm not sure how the SPAC could ever be worthless.

Re: Could giant SPACs be next?

#62

Post by melomal »

TeMPOraL wrote: post #58
melomal wrote: post #56

Earlier quoted context omitted.

Follow the 'unicorn' startups and you will find all of the origin's for buzzwords. SPACs have been around for a long time, also they were considered a junk method of going public due to the nature of SPACs. It's the fact that a few startups managed to IPO with solid results and now it's flavour of the month. It's madness to see and I learned a new word because of it 'cargo cult management'.

> and I learned a new word because of it 'cargo cult management' You're welcome :). Perhaps you can help me back and explain to me, what's up with SPACs this month ? I've been hanging around startup circles for years now, and I've never noticed SPACs until some HN threads yesterday or two days ago. And now I see them everywhere. Did Matt Levine write about them recently or something?

Thanks :) I'm not sure why but having a name for this culture just makes things a little easier to digest for me.

https://trends.google.com/trends/explore?q=SPACs&geo=US

I'm trying to find the first mention of a SPAC and which 'unicorn' was the catalyst to trigger this storm. BUT the key reason is that there are far fewer limitations on the promotion of the stock itself. The startup will be bleeding cash, and a IPO requires too much paperwork and hiding numbers gets harder, SPACs will let a startup raise cash when their metrics are poor and they need cash to keep the ride going.

Re: Could giant SPACs be next?

#63

Post by ehnto »

TeMPOraL wrote: post #58
melomal wrote: post #56

Earlier quoted context omitted.

Follow the 'unicorn' startups and you will find all of the origin's for buzzwords. SPACs have been around for a long time, also they were considered a junk method of going public due to the nature of SPACs. It's the fact that a few startups managed to IPO with solid results and now it's flavour of the month. It's madness to see and I learned a new word because of it 'cargo cult management'.

> and I learned a new word because of it 'cargo cult management' You're welcome :). Perhaps you can help me back and explain to me, what's up with SPACs this month ? I've been hanging around startup circles for years now, and I've never noticed SPACs until some HN threads yesterday or two days ago. And now I see them everywhere. Did Matt Levine write about them recently or something?

Why yes, yes he did.

https://www.bloomberg.com/news/newsletters/2021-01-08/money-...

Re: Could giant SPACs be next?

#64

Post by wissam124 »

plouffy wrote: post #60
SomewhatLikely wrote: post #41

Earlier quoted context omitted.

I thought you get your $10 back if there's no merger. Is this not the case?

Yes. SPACS are not stocks, not sure what the other replier is talking about (they're SPVs). If a SPAC doesn't find a company to merge with you get your money back and some interest. If a SPAC finds a company, you have the choice to (1) stay invested in the SPAC and therefore the company or (2) refuse the merger and get your money back with interest. Interestingly when you invest in a SPAC you actually get two things…

Not sure I understand what you mean at the end of your comment. If you sell the warrant, you no longer hold the option to buy the underlying stock, do you?

Re: Could giant SPACs be next?

#65

Post by wissam124 »

plouffy wrote: post #60
SomewhatLikely wrote: post #41

Earlier quoted context omitted.

I thought you get your $10 back if there's no merger. Is this not the case?

Yes. SPACS are not stocks, not sure what the other replier is talking about (they're SPVs). If a SPAC doesn't find a company to merge with you get your money back and some interest. If a SPAC finds a company, you have the choice to (1) stay invested in the SPAC and therefore the company or (2) refuse the merger and get your money back with interest. Interestingly when you invest in a SPAC you actually get two things…

One other point that I don't understand well with SPACs warrants. Once the merger has completed, it doesn't seem like the warrant price really tracks the underlying stock with weird situations where the warrant is priced below intrinsic value. Is there a straight arbitrage to make there or am I missing something?

Re: Could giant SPACs be next?

#66

Post by [deleted] »

AznHisoka wrote: post #59
legym wrote: post #22

Been trading SPAC's recently. Seeing a huge influx of SPACs in renewable energy. Jump in at the beginning and the most you can lost is 10$ if the SPAC fails. When it receives a letter of intent(LOI) you'll see a big boost to the stock price. When the definitive agreement (DA) is announce there is another 20% jump. After the merge and symbol change, the price drops and then slowly comes up. With so many coming out, ju…

The most you can lose is $10? No matter how many shares you own? Or is that per share?

[deleted]

Re: Could giant SPACs be next?

#67

Post by alwayseasy »

dmurray wrote: post #9
gundmc wrote: post #5

What's driving the recent popularity explosion of SPACs? They've been around since at least the early 2000s, but total capital participating has risen nearly tenfold since 2014.

From the company's side, there is a willingness to explore non-traditional methods of going public (see also: direct listings, or not going public at all). I would say this has been driven directly by a perception that companies leave money on the table in traditional IPOs, and indirectly by the rise of the "disruptor" mindset led by tech companies where CEOs are more willing to challenge the status quo. From the inv…

> From the investors' side, SPACs are popular because they've been really successful! I don't have stats on this but just buying SPACs surely outperformed any index in the last 5 years.

According to Goldman Sachs, SPACs actually underperform traditional IPOs and the market after their merger.

Source: https://www.barrons.com/articles/spacs-performance-ipo-merge...

Re: Could giant SPACs be next?

#68

Post by melomal »

ehnto wrote: post #63
TeMPOraL wrote: post #58

Earlier quoted context omitted.

> and I learned a new word because of it 'cargo cult management' You're welcome :). Perhaps you can help me back and explain to me, what's up with SPACs this month ? I've been hanging around startup circles for years now, and I've never noticed SPACs until some HN threads yesterday or two days ago. And now I see them everywhere. Did Matt Levine write about them recently or something?

Why yes, yes he did. https://www.bloomberg.com/news/newsletters/2021-01-08/money-...

Well damn, he really did

Re: Could giant SPACs be next?

#69

Post by giergirey »

gundmc wrote: post #5

What's driving the recent popularity explosion of SPACs? They've been around since at least the early 2000s, but total capital participating has risen nearly tenfold since 2014.

Perhaps everything comes around again once sufficient people have forgotten the lessons from last time - e.g. maybe the story from the South Sea Bubble in 1720 of "a company for carrying out an undertaking of great advantage, but nobody to know what it is" was an early SPAC ... https://en.wikipedia.org/wiki/South_Sea_Company#Quotations_p...
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