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Could giant SPACs be next?
- sixothree 6y agoHow do you pronounce SPAC?
- babelfish 6y agoExactly how it looks - “Spack”
- hkt 6y agoUnfortunately, in the UK this is a deeply hateful term for disabled people. Actual hate speech if you couple it with violence etc. What's the old saying? Two cultures divided by a common language..
- babelfish 6y agoWow, I had no idea - thanks for the heads up
- jfk13 6y agoInteresting -- as a UK native, I don't recognise that. Maybe it's limited to certain regions/subcultures/???
- chris_j 6y agoThe word was definitely used (and was understood to be offensive) when I was growing up - in Worcestershire in the 90s. I wonder if it's fallen out of use since then.
- jfk13 6y agoI'm assuming it was meant as a shortening of "spastic"? In which case the version I'm familiar with would be "spaz", though it must be years -- probably decades -- since I've run across it.
- hkt 6y agoI'm from the midlands and live in Yorkshire. It is recognised by people in both places. Odd.
- missedthecue 6y agoWow never heard of this and I lived in the UK for an extended period of time. Thanks for the info.
- idlemind 6y agoIt’s not in particularly common usage anymore though, if at all.
- sdflhasjd 6y agoI came across "spack"[1], another unfortunately named repo recently as well. Another good one is "nonce" - seen frequently in oauth and crypto - always gets a laugh out of the juniors. [1] https://github.com/spack/spack https://github.com/spack/spack
- sixothree 6y agoI ask because it looks like "space" to me.
- sgpl 6y agoI'm pretty bearish on SPACs tbh. Not in the immediate future but 2-3 years out (most of 2021 will be spent on vaccines so I'm sure there will be more stimulus added to the economy). It's just bonkers that there's so many companies that you can take public with this mechanism without more than a handful being duds so it just seems like market participants who are able to launch SPACs are doing so to take advantage of the mkt conditions to cash out. Also, there are no incentives to keep the SPAC promoters as long term shareholders so they really don't have any reason to not dump their shares after a little bit of time unless they see that these companies will have sustained growth. So to me (with a few exceptions) this seems like a massive pump and dump scheme but with more sophisticated players. I had initially assumed that there was only a little bit of extra cash floating around in the US on the account of the two stimulus bills passed but I recently read in an article on Bloomberg that the US Govt/Fed bought something in the neighbourhood of $5 TRILLION worth of corporate bonds in 2020 alone to keep the mkts from freezing, etc. And that number that really seemed absolutely unreal to me. Out of that, a lot of it went to companies (esp. those controlled by Private Equity) to pay dividends to their owners. Lots of share repurchases as well I'm sure. So lots of cash floating around with investors for SPACs to keep chugging along till the US keeps adding more money to the mkts.
- jtseun 6y agoI heard someone say "Pre-LOI SPACS are loot boxes for investors". While they may come off as a pump & dump, all SPACs have a floor of hard cash placing them around $10; notably Ackman's PTSH is $20. Looking at IPOE popping 20% off Chamath's tweets, it does feel like some variant of musical chairs.
- gundmc 6y agoWhat'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.
- Judgmentality 6y agoSpeculative opinion - lack of regulations are increasingly appealing in an ever frothier market.
- namdnay 6y agoit's exactly that. there's more demand for IPOs than supply of them at the moment, so people are willing to invest in less well regulated options, such as SPACs (which are basically just a workaround the regulatory burden of IPO)
- jcomis 6y agobasically they became much more accessible to regular people, and thus much more exposed to the pump+dump cycle and hucksters. I'm not saying SPACs are bad, but I think that is what is driving the recent craze. The number of wildly speculative and clear astroturf threads on reddit about PSTH or CCIV and others is crazy.
- dmurray 6y agoFrom 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 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. You'd expect this effect to disappear as they get more popular, but it's worth noting that blindly buying IPOs has also been a really good investment strategy - enough first-day pops of 50% or 100% to outweigh the duds - though less accessible to small investors.
- sitkack 6y agoCould someone ELI 15?
- totalZero 6y agoSure. What part? SPACs are basically stocks in search of a company. People put their resources together, and then eventually the guy who runs the SPAC finds a great company to invest in, and uses the SPAC to buy it. Nowadays, some companies are using SPACs to go public instead of using an IPO. In some ways it's like the work-from-home version of an IPO; the investors are already subscribed, and the stock is already public. So far, we have seen small companies get acquired by SPACs. However, there are many private and established companies out there. The article asks whether any of those much larger companies are going to become SPAC targets.
- sitkack 6y agoThanks that really helped. Seems less shady than IPO via a reverse merger with an OTC stock.
- creeble 6y agoWhat's the difference between a SPAC and what used to be called a "reverse merger"? I.e., when a smaller (but publicly traded) company, merges with a larger private company. These used to be pretty common scammy ways to generate capital, usually through pump and dumps. Same thing, just new acronym?
- the_mitsuhiko 6y ago> What's the difference between a SPAC and what used to be called a "reverse merger"? A SPAC is created for the designated purpose to become a vehicle to take another company public. In a traditional reverse merger situation both companies are engaged in some regular business activity.
- Judgmentality 6y agoYou make a SPAC sound even shadier than a reverse merger.
- nibsfive 6y agoIt's more an indication of how (irrationally) intent companies are on staying private well into their days as a global empire.
- toomuchtodo 6y agoWhy is it irrational to stay private? Going public constrains you with oversight and public shareholder demands. If you can get access to capital without public shareholders, you absolutely should.
- deleted 6y ago[deleted]
- Judgmentality 6y agoIt seems like the only rational reasons to IPO are out of necessity (you need to raise the money, your employees will quit without liquidation, etcetera), or short-term greed. What other reason would you want to be public?
- legym 6y agoBeen 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, just keep jumping to new SPACS as the LOI or DA is announced. Just wanted to share my experiences. EDIT: Nikola and QuantumScape (NKLA/QS) are the big ones that got attention. Every SPAC is hoping to make a run like QS; 10$ went all the way up to 100$ at one point. NKLA was a scam, but brought a lot of attention
- cyral 6y agoWhat's the best way to monitor for new SPACs and when those events happen?
- legym 6y agoI'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 https://spactrack.net
- silexia 6y agoA 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.
- totalZero 6y agoTo take the other side of this perspective: The edge is twofold. First, it's a way to pool funding using an exchange rather than getting some bank to underwrite an IPO. Second, many of the people who run SPACs are famous investors who have a track record of success and have greater information and access than most investors.
- erik_seaberg 6y agoI keep wondering what a minimum viable public company would look like with open-book accounting. How much of the SOX compliance burden is merely auditing that your public numbers are close enough to your secret numbers?
- gbolcer 6y agoWhat's the old saying? If everything is "special" then nothing is.
- naruvimama 6y agoIf you do not want to hold your money in the bank. Nor do you want to invest your money in artificially inflated stock. Coming out of the pandemic we are going to see a monumental shift in lifestyle and economics. It is that crisis that replaces old guards with new champions. SPACs had a bad reputation, but in the current circumstances seem pretty reasonable. I guess in terms of risk-benefits it is an intermediate between VC & established stocks (and we have seen how stable that has been in 2020 :) )
- perardi 6y ago“Nor do you want to invest your money in artificially inflated stock.” How does a SPAC possibly help with that? One of the more notable SPACs was Nikola, which had effectively no revenue, and was very unstable. https://www.google.com/finance/quote/NKLA:NASDAQ?sa=X&ved=2ahUKEwi8nc_w3rXuAhXSQs0KHSUWCOUQ3ecFMAB6BAgCEBk https://www.google.com/finance/quote/NKLA:NASDAQ?sa=X&ved=2a...
- hammock 6y ago.. And is still up 100% last 52wks?
- naruvimama 6y agoIsn't all stock valued on speculation. I guess you would pick SPACs promoted by people you trust will make a good deal.
- fossuser 6y agoYeah - Nikola is fraud, I think it’ll go to zero it’s just hard to know when. This is also the general problem I have with SPACs. The incentives are all wrong. If you’re a founder and some SPAC approaches you wanting to merge to take you public it means they think they can get a deal from you. They promise price certainty over an “uncertain market”, but if they’re willing to make the deal it’s because they’re betting the market will be good to them. Why would the founder take that? They should do their own IPO then if that’s the case or they’re getting ripped off. Unless their company is fraudulent bullshit in which case they might as well take the SPAC deal and then they can dump their position on the public (after hyping it up of course). Then you can buy your $33M ranch in Utah [0] and retire on the winnings from your successful con. Founders and SPAC investors cash out rich and the public is left holding the bag. At best the founder is lazy and doesn’t want to deal with the logistics of a direct listing or IPO and that doesn’t bode well for my impression of the founder either. I won’t invest in a SPAC and my prediction is that companies that go public via a SPAC will underperform those that go public by other means (especially those that do a direct listing). [0]: https://www.latimes.com/business/real-estate/story/2019-11-14/nikola-motor-head-trevor-milton-2000-acre-utah-ranch https://www.latimes.com/business/real-estate/story/2019-11-1...