Looking back, it truly is amazing how many special purpose acquisition companies (SPACs) have hit U.S. markets over the last three years. What used to be a niche vehicle used sparingly turned into an all-out free-for-all to bring as many “promising companies” public as possible. 🙃
But as the market cooled off and many of these SPAC darlings proved to make nobody money except their promoters, we’ve seen the appetite for them fall significantly. Only 14 SPACs came public through May of this year, with just a few more since then. That pales in comparison to the last few years’ pace and is more in line with pre-pandemic norms. 🔻
With technology stocks leading a sharp rebound in the stock market since October, more companies are looking to test investor appetite for new offerings. 😋
A prime example is Serve Robotics, an autonomous sidewalk delivery robot startup spun out of Uber’s acquisition of Postmates. The company has raised $56 million from investors like Uber, Nvidia, and Wavemaker Partners. However, the recent regional banking troubles and cooling off of the venture capital space have it looking to broaden its investor base. Or so it says…
As a result, it recently completed a reverse merger with Patricia Acquisition Corp. and is going public.
Additionally, Vietnamese electric vehicle (EV) maker VinFast after shareholders of Hong Kong-based Black Spade Acquisition approved the company’s merger. In a joint statement, the two said the combined company will list on the Nasdaq under ticker symbol $VFS “on or around August 15th.”
The merger valued the company at $23 billion but will not raise new capital for the business as it looks to build a plant in North Carolina and take on the U.S. car market. ⚡
Risk appetite in the stock market has clearly improved as investors look past inflation risk and onward to a “soft” economic landing. However, it’s unclear whether the battle scars from SPACs of the past have faded enough for investors to jump at new offerings.
After all, with scooter company Bird Global having a negative total return during its entire history as a public company…we don’t blame people for being a little skeptical. 😬
For right now, it’s too early to say SPACs are back. And we’re not even sure if they should come back. But clearly, It’s less of a frenzy and more of a garage sale for now. There may be some deals to be found, but there is definitely a lot of junk still for sale. 🤷