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SPACs collapse as $11B of deals are called off within an hour

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Re: SPACs collapse as $11B of deals are called off within an hour

#101

Post by hef19898 »

azinman2 wrote: post #43
this_user wrote: post #41

Earlier quoted context omitted.

Not really. You just have to ask yourself why these private companies were even going the SPAC route rather than do a regular IPO. The answer was usually that these were not particularly great companies, and doing an IPO means the company is put under a lot of scrutiny. SPACs are a way to avoid that, so insiders can cash out.

Or they were high capital low margin businesses. There are many of these out there, like defense or airline businesses. We need them to exist, but investors don’t like them because it’s harder to make money from them. It doesn’t mean the business is bad, it just means payoff is longer. SPACs are one of the few ways they can get money.

Defence is a different beast, and not necessarily low margin neither. Airlines as well, except the margin are tighter there. Since both industries are rather well understood by investors, IPOs and general investment are not that much of a problem.

All those companies relying on VC money to grow by selling dollars for dimes, in hopes of dumping the whole thing on retail investors through an IPO, well, those are in a lot of trouble now. As are those in need of a lot of capital to develop products, e.g. expensive hardware, that don't have a clear path to releasing a product to the market so far.

Re: SPACs collapse as $11B of deals are called off within an hour

#102

Post by Grustaf »

azinman2 wrote: post #43
this_user wrote: post #41

Earlier quoted context omitted.

Not really. You just have to ask yourself why these private companies were even going the SPAC route rather than do a regular IPO. The answer was usually that these were not particularly great companies, and doing an IPO means the company is put under a lot of scrutiny. SPACs are a way to avoid that, so insiders can cash out.

Or they were high capital low margin businesses. There are many of these out there, like defense or airline businesses. We need them to exist, but investors don’t like them because it’s harder to make money from them. It doesn’t mean the business is bad, it just means payoff is longer. SPACs are one of the few ways they can get money.

Why would it be different to raise money through a SPAC if you're capital intensive?

Re: SPACs collapse as $11B of deals are called off within an hour

#103

Post by hef19898 »

jpgvm wrote: post #100
boringg wrote: post #4

Any successful SPACs out there?

SKIN - still trading above NAV post-merger despite all the market turmoil. It's not one of the "sexy" SPACs in EVs and stuff though, they make beauty products and most of their business is consumables for those products.

You gotta love companies with a solid business, clients and products, don't you?

Re: SPACs collapse as $11B of deals are called off within an hour

#104

Post by blitzar »

feifan wrote: post #76
boringg wrote: post #4

Any successful SPACs out there?

It depends on your time horizon. Lots of people deride Chamath's SPACs, but several of them traded well above their initial $10 price for 1.5+ years until the market started dropping at the beginning of this year.

> Lots of people deride Chamath's SPAC

That is because he is a shyster.

Con artists make money and are equally as deserving of derision as people who go broke.

Re: SPACs collapse as $11B of deals are called off within an hour

#106

Post by pasquinelli »

themitigating wrote: post #77
fshbbdssbbgdd wrote: post #73

Earlier quoted context omitted.

Not the parent, I can’t speak for them. But sometimes I have a paranoid notion that the managerial and legal class have constructed systems where they contain some liability into a black box, then hire someone unknowing to live in the box. The people outside the box are just designing the process and “relying” on the box to behave as expected. The people inside the box don’t know about the context and therefore don’t…

"managerial and legal class" implying people of certain professions are involved in a conspiracy is extremely paranoid.

people of certain class have shared interests, that's what makes a class. so they broadly act in the same way because they're responding to the same incentives, no conspiracy needed.

Re: SPACs collapse as $11B of deals are called off within an hour

#107

Post by foota »

fshbbdssbbgdd wrote: post #73
joshu wrote: post #61

Earlier quoted context omitted.

Huh?

Not the parent, I can’t speak for them. But sometimes I have a paranoid notion that the managerial and legal class have constructed systems where they contain some liability into a black box, then hire someone unknowing to live in the box. The people outside the box are just designing the process and “relying” on the box to behave as expected. The people inside the box don’t know about the context and therefore don’t…

Please.

Re: SPACs collapse as $11B of deals are called off within an hour

#108

Post by quickthrower2 »

robotresearcher wrote: post #25
taywrobel wrote: post #21

Earlier quoted context omitted.

Not sure why you’re getting downvoted, this is a primarily tech forum and a SPAC is a primarily business concept. It means a “special purpose acquistion company”. It’s effectively a company set up for the express purpose of facilitating an acquistion or merger of companies, so that assets or IP ownership can be moved in an optimally tax or otherwise cost efficient way. Many have argued they provide no value except fo…

> Not sure why you’re getting downvoted, Likely because you'll get the answer from first Google hit quicker than typing the question in English. Edit: I don’t object to the question. Just stating my guess as to why the downvotes occurred.

Google? How November

Re: SPACs collapse as $11B of deals are called off within an hour

#109

Post by lmm »

pbreit wrote: post #64

Are SPACs inherently bad or do they attract lousy offerings (or is that the same thing)?

Their main benefit is price certainty, so they attract volatile offerings. Theoretically they're attractive for companies whose price depends a lot on external factors; you could imagine that being e.g. a company that uses a lot of expensive raw materials or something, but in practice it's mostly companies in hype-driven industries or those whose success is completely dependent on one or a small number of other companies (e.g. a company making iphone accessories is completely dependent on how well the iphone is doing), and those don't tend to be the strongest or most solid companies.

Re: SPACs collapse as $11B of deals are called off within an hour

#110

Post by lmm »

joko42 wrote: post #8
TylerE wrote: post #3

Good. Never should have been allowed in the first place.

When financial instruments like this collapse it doesnt mean money turned to thin air. Rather it means money changed hands. The people who created and sold this asset probably ended up richer . And average people who bought the hype, sadly, poorer.

SPACs are a rare positive exception to that usual logic. The people who bought in get their money back, the "sponsor" (usually a financial engineering company) is the one who loses out.
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