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I think people don't realize that SPAC creators make money in very different ways than the SPAC share/warrant chasers. Its the same with crypto, ICOs, and basi

I think people don't realize that SPAC creators make money in very different ways than the SPAC share/warrant chasers. Its the same with crypto, ICOs, and basically every financial service. The SPAC creators get a large percentage of the shares in almost every deal, just for showing up and getting an agreement with a target company. Depending on the contract they also get a percentage of the capital used to fund the SPAC. So even with Chamath's deals being "down" with the share prices tanking, he's made a ton of money for himself and his fund. Share prices tank probably because he is selling into liquidity. I do not find this controversial. I find the gap in knowledge to be peculiar.

boringg 5y ago
Agreed - as with most things I am often shocked at the lack of knowledge people know about how things work. Especially in the stock market frenzy these days - people are just buying stock as if its a gamble (which it kind of is) but without any understanding of much of anything other than hype (which, to be fair, you can do well trading like that).
- vmception 5y ago
  I’m still trying to reprogram myself to understand hype momentum trading. I’m just about ready to open small but meaningful positions in meme stock options and meme cryptos. I expect them to make a loss, but all the others tops were not tops and actual hedge funds and non profits (Mormon Church, for example) join the sentiment and trade too. All top indicators don't matter when the Federal Reserve and Congress are adding more money into the system. It doesn't matter if people that rarely have money to invest are talking about investing.
pedalpete 5y ago
This is correct, but I wonder how many people also consider the banks often price the IPO so they get a better deal than the public markets. Somewhere, everyone is always getting a cut.
- vmception 5y ago
  IPOs the banks already have bought all the newly created shares from the company in the company’s last funding round before being publicly traded, and attempts to generate public interest and sell the shares at a higher price. Keeping a percentage of the proceeds and a percentage of the shares and upfront fees.
  - URSpider94 5y ago
    That’s not accurate at all. Investment banks rarely participate in fund raising rounds. They don’t usually hold a stake in the company at all. The way they make money is typically by charging a 6% commission on the shares that are floated in the IPO. The higher the IPO price, the higher their commission.
    - vmception 5y ago
      What do the underwriters do and are they not investment banks?
      - URSpider94 5y ago
        Investment banks are the underwriters. They do in fact buy the IPO shares from the company and re-sell them, but the mark-up for that resale is on a commission basis, customarily 6%. It’s not like they are buying the shares at price x and then trying to sell them at price y. The round is priced jointly between the underwriter and the IPO’ing company based on orders obtained during the road show.

boringg 5y ago

Agreed - as with most things I am often shocked at the lack of knowledge people know about how things work. Especially in the stock market frenzy these days - people are just buying stock as if its a gamble (which it kind of is) but without any understanding of much of anything other than hype (which, to be fair, you can do well trading like that).

vmception 5y ago
I’m still trying to reprogram myself to understand hype momentum trading. I’m just about ready to open small but meaningful positions in meme stock options and meme cryptos. I expect them to make a loss, but all the others tops were not tops and actual hedge funds and non profits (Mormon Church, for example) join the sentiment and trade too. All top indicators don't matter when the Federal Reserve and Congress are adding more money into the system. It doesn't matter if people that rarely have money to invest are talking about investing.

pedalpete 5y ago

This is correct, but I wonder how many people also consider the banks often price the IPO so they get a better deal than the public markets. Somewhere, everyone is always getting a cut.

vmception 5y ago
IPOs the banks already have bought all the newly created shares from the company in the company’s last funding round before being publicly traded, and attempts to generate public interest and sell the shares at a higher price. Keeping a percentage of the proceeds and a percentage of the shares and upfront fees.
- URSpider94 5y ago
  That’s not accurate at all. Investment banks rarely participate in fund raising rounds. They don’t usually hold a stake in the company at all. The way they make money is typically by charging a 6% commission on the shares that are floated in the IPO. The higher the IPO price, the higher their commission.
  - vmception 5y ago
    What do the underwriters do and are they not investment banks?
    - URSpider94 5y ago
      Investment banks are the underwriters. They do in fact buy the IPO shares from the company and re-sell them, but the mark-up for that resale is on a commission basis, customarily 6%. It’s not like they are buying the shares at price x and then trying to sell them at price y. The round is priced jointly between the underwriter and the IPO’ing company based on orders obtained during the road show.