A primer on, and critical look at, one of Wall Street’s hottest trends: special purpose acquisition companies.
For more episodes and free early access before our regular 3 p.m. Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, iHeartRadio or RSS.
This episode is sponsored by Bitstamp and Crypto.com.
Special purpose acquisition companies have been around since the 1990s, but have seen a significant uptick in popularity in recent years. Companies like Virgin Galactic, Draft Kings and Nikola have changed SPAC’s reputation from a tool for second- and third-tier private equity shops to win fees to a legitimate alternative to initial public offerings. In 2020, SPACs have made up roughly 40% of the IPO market.
See also: The Real Story Behind Tesla’s Crazy Rally
Recently, chatter around SPACs reached a fever pitch with the listing of Bill Ackman’s Pershing Square Tontine Holdings – the largest-ever SPAC.
In this episode, NLW breaks down:
- What a SPAC is
- Standard SPAC terms
- Why the traditional IPO process has generated growing discontent, especially from Silicon Valley
- The benefits of SPACs for companies and investors
- The downsides of SPACs for companies and investors
- A number of reasons explaining why SPAC popularity is surging now
- How Robinhood retail traders are creating an important bridge buyer for SPACs
- Why Ackman’s Tontine Holdings SPAC could change how we think about SPACs in the future
- Are SPACs a bubble?
Cited resources:
SPAC Man Begins – Alex Danco
SPACs as a Call Option on Hype – Bryne Hobart
SPACs: the most ludicrous bubble we’ll ever see… why not $IAC? – Yet Another Value Blog
Return of the SPAC – John Street Capital
For more episodes and free early access before our regular 3 p.m. Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, iHeartRadio or RSS.