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After the announcement of the acquisition, the stocks of special-purpose acquisition companies are declining, which clearly reversed the enthusiasm for these tools earlier this year, which may threaten their ability to conduct transactions.
According to the “Financial Times” analysis of Refinitiv data, of the 13 Spacs announced in May, only one had a transaction price of more than $10, which was the level at which the blank check company’s stock was initially priced.
According to data from Spac Research, after the deal was announced in March, nine out of ten stocks traded at more than $10, and many of them traded at more than $10.
Market experts attribute this turning point to the withdrawal of institutional investors from the market and lack of interest from retail traders, who turned their attention to other speculative assets, such as Cryptocurrency.
Ari Edelman, partner of Reed Smith, said: “The retail part of the transaction is a big issue.” “Many activities around Spacs involve the way stocks are traded and the success of Spacs is very important. Much depends on retail sales.”
Spac boom Mainly supported by hedge funds They will buy the structure as early as possible and use leverage to increase returns. However, once the deal was concluded, the vast majority of them were sold out and replaced by new investors eager to acquire shares in the newly listed company. This does not seem to be the case anymore.
The main sponsor of Spac said: “The retreat of retail investors has been particularly bad.” “From September until the bubble burst, the retail industry sparked huge speculation. [in April] Now the Spac market is dead, dead, dead. ”
Just a few weeks ago space After the company announces its acquisition target, it is almost guaranteed that its stock price will “sag.” Sometimes there are even rumors, such as working with Michael Klein’s Churchill Capital IV and Lucid Motors to increase the stock price of this blank check company by 80% or 90%.
Now, even big deals that are widely known cannot attract investors.
The Saring Eagle Acquisition, a Spac company founded by successive sponsors and former Hollywood executive Harry Sloan, had a transaction price of less than $10, even though it was announced last week that it would sell Bill at a price of $17.5 billion. ·Ginkgo Bioworks, supported by Bill Gates, went public. Similarly, since Aurora Acquisition announced a $6.9 billion deal with SoftBank-backed mortgage company Better, its stock price has fallen 10%.
If the trend continues, Spacs may be forced to reprice the transaction to win shareholder approval. If the investor decides to refuse to trade and redeem the stock, the investor will receive about $10 in cash, which is why the threshold of $10 is high.
Aeye, which produces lidar sensors for autonomous driving, repriced a deal with Spac sponsored by Cantor Fitzgerald this month, agreeing to reduce its $1.9 billion valuation announced in February by 20%. The company cited public lidar company transactions and “changes in the automotive lidar industry” as the difference.
Additional reporting by Madison Darbyshire
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