4 ms·

That's my problem with SPACs. The people who put them together walk away with all the money. IronNet, 23andMe, and Adstra, had similar drops.

exogeny 4y ago
I think the bigger problem is most of the companies that go public this way are dogshit money-losers that shouldn't be public in the first place.
- 1270018080 4y ago
  All SPACs, and some traditional IPOs, are a last ditch effort of dumping worthless equity onto naive retail investors.
  - bombcar 4y ago
    The fact that some recover and become "real companies" doesn't detract from this. Beware the IPO and the SPAC.
- Mistletoe 4y ago
  > The company in February projected an operating loss of $43.2 million this fiscal year on sales of $47.4 million and an operating loss of $44.7 million in fiscal 2023 on sales of $63.5 million. Nice stats haha.
jmspring 4y ago
BlackSky, Getaround, others...
- monktastic1 4y ago
  SoFi (IPOE) too.
Nifty3929 4y ago
I don't think you should consider this a problem. They are providing a service for OTHER people who want to invest. Effectively, they are selling picks and shovels to people who want to mine gold. Barring SEC regs, it's not up to the "people who put them together" to judge whether or not the investment is a good one. The people who want to invest do, and take their chances.
dan-robertson 4y ago
Don’t the shareholders get their money back with interest if they don’t like the deal? I thought the way a SPAC works was roughly: - sponsors create a spac selling shares+warrants for, say, $10 - they have two years to merge with a company - when the merger is sorted, shareholders can choose either (a) to get their money back + 3%, (b) to get their share in the resulting company and discard their warrant, or (c) to get their share and exercise their warrant to buy another share at some potentially good price - the sponsors get 20% of the pre-warrant equity in the spac’s investment. I think they might have a long lock-out period before they can sell too - if no merger happens, investors get back their money with interest. So maybe I don’t understand what you mean, or maybe I don’t understand what a spac is, but isn’t it bad for the sponsors if the shareholders don’t like the merger? Maybe it’s more subtle and it is a lot worse than coming up with a good merger but still better than not doing the spac at all.
- miohtama 4y ago
  Your understanding of SPACs is correct. However sketchy sponsors might have short vesting periods.

exogeny 4y ago

I think the bigger problem is most of the companies that go public this way are dogshit money-losers that shouldn't be public in the first place.

1270018080 4y ago
All SPACs, and some traditional IPOs, are a last ditch effort of dumping worthless equity onto naive retail investors.
- bombcar 4y ago
  The fact that some recover and become "real companies" doesn't detract from this. Beware the IPO and the SPAC.
Mistletoe 4y ago
> The company in February projected an operating loss of $43.2 million this fiscal year on sales of $47.4 million and an operating loss of $44.7 million in fiscal 2023 on sales of $63.5 million. Nice stats haha.

jmspring 4y ago

BlackSky, Getaround, others...

monktastic1 4y ago
SoFi (IPOE) too.

Nifty3929 4y ago

I don't think you should consider this a problem. They are providing a service for OTHER people who want to invest. Effectively, they are selling picks and shovels to people who want to mine gold. Barring SEC regs, it's not up to the "people who put them together" to judge whether or not the investment is a good one. The people who want to invest do, and take their chances.

dan-robertson 4y ago

Don’t the shareholders get their money back with interest if they don’t like the deal? I thought the way a SPAC works was roughly: - sponsors create a spac selling shares+warrants for, say, $10 - they have two years to merge with a company - when the merger is sorted, shareholders can choose either (a) to get their money back + 3%, (b) to get their share in the resulting company and discard their warrant, or (c) to get their share and exercise their warrant to buy another share at some potentially good price - the sponsors get 20% of the pre-warrant equity in the spac’s investment. I think they might have a long lock-out period before they can sell too - if no merger happens, investors get back their money with interest. So maybe I don’t understand what you mean, or maybe I don’t understand what a spac is, but isn’t it bad for the sponsors if the shareholders don’t like the merger? Maybe it’s more subtle and it is a lot worse than coming up with a good merger but still better than not doing the spac at all.

miohtama 4y ago
Your understanding of SPACs is correct. However sketchy sponsors might have short vesting periods.