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

bloomberg.com

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

#21

Post by taywrobel »

ElijahLynn wrote: post #11

What is a SPAC?

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 for helping wealthy people retain their wealth, hence why you see a lot of folks here lacking sympathy in their collapse.

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

#22

Post by yieldcrv »

JumpCrisscross wrote: post #9
joko42 wrote: post #8

Earlier quoted context omitted.

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.

> it doesnt mean money turned to thin air Of course it does. Wealth becomes money through credit. It promotes spending through the wealth effect [1]. [1] https://en.m.wikipedia.org/wiki/Wealth_effect

In this case it is just a redemption of money

There are some investors that bought SPAC shares and warrants at a premium, who are now at a loss, but primary issuance investors are just made whole.

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

#25

Post by robotresearcher »

taywrobel wrote: post #21
ElijahLynn wrote: post #11

What is a SPAC?

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.

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

#27

Post by skybrian »

Due to how SPACs work, investors will be getting most of their money back. Typically they IPO at $10. The money gets returned if no deal is made.

> Concord’s sponsors will throw in the towel and return roughly $10.17 a share to investors, the SPAC said in a subsequent filing. The stock closed at a high of $13 in November 2021 and garnered attention from Wood’s Ark Investment, which is among the SPAC’s biggest investors with about 3.2 million shares, according to Bloomberg data. Her ETFs snapped up 222,800 shares last November, when the stock traded above $11, and bought 278,000 more in February on a day that it closed at $10.37, according to trading updates.

So if someone bought at $13 they lost 22% on the investment, but most probably bought at less than that.

(Not a financial professional; corrections welcome.)

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

#28

Post by highwaylights »

taywrobel wrote: post #21
ElijahLynn wrote: post #11

What is a SPAC?

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…

The other big reason they’ve become so popular lately is that they allow private companies to go public without an IPO (thus avoiding a lot of the disclosures that would otherwise be required).

Public SPAC created with no business -> raises funding from investors (or marks) -> “acquires” private company -> SPAC renames to private company’s name -> private company is now public without IPO

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

#29

Post by JumpCrisscross »

yieldcrv wrote: post #22
JumpCrisscross wrote: post #9

Earlier quoted context omitted.

> it doesnt mean money turned to thin air Of course it does. Wealth becomes money through credit. It promotes spending through the wealth effect [1]. [1] https://en.m.wikipedia.org/wiki/Wealth_effect

In this case it is just a redemption of money There are some investors that bought SPAC shares and warrants at a premium, who are now at a loss, but primary issuance investors are just made whole.

> it is just a redemption of money

Plenty of secondary buyers lost money. To say nothing of everyone who owns Circle.

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

#30

Post by fastball »

ElijahLynn wrote: post #11

What is a SPAC?

A SPAC, or Special Purpose Acquisition Company, is a type of investment vehicle that is formed for the purpose of acquiring or merging with another company. SPACs are often used as an alternative to the traditional initial public offering (IPO) process, as they provide a faster and more efficient way for a private company to become publicly traded.

SPACs are typically created by a group of investors, who raise money from other investors through an IPO. The investors provide the capital for the SPAC, and the SPAC's managers use that capital to search for a private company to acquire. Once the SPAC finds a target, the two companies merge and the investors in the SPAC receive shares in the newly combined company.

People use SPACs for a variety of reasons. For investors, a SPAC can provide an opportunity to invest in a private company without having to go through the traditional IPO process. For the managers of the SPAC, a SPAC can provide a way to raise capital and make a potential return on their investment if the acquisition is successful. For the target company, a SPAC can provide a way to become publicly traded without going through the time and expense of a traditional IPO.

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