SPACs Get Beat Up Again
SPACs are getting increasingly battered as IPOs are scarce, pre-deal SPACs fall consistently below NAV, and announced deals continue to weaken. EV SPACs got hammered as two deals closed.
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Another rough day for SPACs as
the average price for a pre-deal SPAC is now down to $9.88. SPACs with announced deals fared even worse with
almost 85% trading down today.
This morning did see one M&A announcement (see below), but that brings the week s total to just two announced and neither impressed.
It s clear the pace will remain slow until peak deal - i.e. when the 420+ SPACs that are searching for targets and feeling the pressure - forces the hand of the SPACs. Those SPACs are trading at an
Will Honest s IPO Take More Shine Off SPACs?
Muted SPAC M&A pops could spark a shift back to the traditional, longer IPO process for private companies. Hoffman and Pincus file for 4th SPAC.
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Are Traditional IPOs Back in Favor?
The SPAC boom was partly fueled by the myriad of advantages that private companies were given by choosing SPAC as their path to public markets, to name a few:
- a faster/far less arduous offering process
- ability to sell investors on
future projections
Following
The Honest Company (HNST) highly successful day-1 IPO, it s fair to ask if more companies will follow their patient lead in the traditional IPO process. They were famously an early unicorn and then, infamously, lost their unicorn status in a down financing round. Yet the company ultimately recovered, and now are close to profitability and have a $2B valuation after closing yesterday up +44%.
What s Next for SPACs
With prices, mood, interest, IPO valuation, and deal valuations all coming down, SPAC investors are asking what comes next.
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SPACs joined Tuesday s tech selloff with the average price of a pre-deal SPAC hitting $9.90 that s 10 cents below NAV. It s ironic that in a SPAC market that is much more rational (and tradable) than during peak SPAC earlier this year investors have lost much of their enthusiasm.
Volume across the board has gone down for SPACs with an
average daily volume dropping from 580,000 in February dropping to 104,000 in April. In some ways this is good as the higher volumes were partly a sign of some irrational SPAC exuberance, but at these levels investors will be very worried about efficiently pricing as they get in / out of SPACs.
Betsy Cohen, the founder of
Cohen commented on the recent SPAC crackdown by the Securities and Exchange Commision, adding that the SEC is concerned with making sure companies going public via SPAC provide well-grounded forward-looking statements.
Cohen On Buffett s SPAC Comments: Co-host Chris Katje asked Cohen to share her thoughts on Warren Buffett s comments on SPACs over the weekend.
In regards to the two-year time frame, Cohen said that two years is a reasonable cycle. It shouldn t take a knowledgeable sponsor longer than two years to do the work, she said.
As far as SPACs making it harder for Buffett to acquire companies, she said: I m not sure I buy into that.
D8 Holdings Corp. (NYSE: DEH)
concerning potential violations of the federal securities laws and/or breaches of fiduciary duties relating to its merger with Vicarious Surgical Inc.
If you are a D8 Holdings shareholder,
.
Halper Sadeh LLP is investigating whether these companies and their boards of directors acted to: (i) maximize shareholder value; (ii) conduct a fair sales process; and (iii) disclose all material information to shareholders in connection with the merger.
Shareholders are encouraged to contact the firm
free of charge to discuss their legal rights and options. Please call Daniel Sadeh or Zachary Halper at (212) 763-0060 or email [email protected] or [email protected].