SPAC-ageddonis here. Or maybe not.Either way, whatever is happening hurts.
Investors in special-acquisition companies and firms recently merged with SPACs are watching their stocks sink—fast. And yet,the steep, swift selloffmight be a boon for bargain hunters.
TheDefiance Next Gen SPAC Derived ETF(ticker: SPAK) is down about 32% from its 52-week high. On Tuesday, the drop was 2.6%.
And the ETF’s more than 200 stocks, on average, are off even a bit more—roughly 33% from their 52-week highs and 11% in the past month alone.
There are probably good deals hiding in plain sight, but finding them is the trick.
One of the hardest-hit stocks in the ETF isHyliion Holdings(tHYLN). Shares of the electric vehicle maker are down about 85% from their 52-week high.
A lot ofEV SPACshave been hammered. Shares ofQuantumScape(QS), Lordstown Motor (RIDE),XL Fleet(XL),Romeo Power(RMO),Canoo(GOEV), and Churchill Capital Acquisition (CCIV), the SPAC merging with Lucid Motors, are down about 80% from their highs on average.
All the pain isn’t reserved just for EV stocks, though.AppHarvest(APPH), Desktop Metal (DM) and AST Sciences (ASTS) are examples. Their shares are down about 65% on average.
About 80% of all the stocks in the ETF are down year to date. The declines have wiped out roughly $400 billion in market value, which represents only about 1% of the total market capitalization of the S&P 500. SPACs are relatively small.
Sorting through what to snap up might take a while. Contrarian investors might want to start now.
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