The resurgence of "Special Purpose Acquisition Companies" (SPACs) has been spearheaded by former President Donald Trump during the final year of his first term, which saw a surge of hundreds of SPACs entering the market. Following Biden's ascension to the White House, investment in these low-transparency vehicles faced regulatory crackdowns, causing the trend to wane. However, with Trump's return to prominence, SPACs are making a comeback. Since the November elections, SPAC sponsors have raised over $24 billion, easily surpassing the total raised in the past two years. A significant portion of these SPACs is linked to Trump's inner circle. Notable figures like Brandon Lutnick, son of the U.S. Secretary of Commerce, Devin Nunes, CEO of Trump Media & Technology Group Corp. and former Republican Congressman, and Chamath Palihapitiya, a major donor and co-host of a podcast on cryptocurrency affairs under Trump's administration, have all initiated their own SPACs. Additionally, Trump's two eldest sons have been listed as advisors for a particular SPAC, which has yet to launch its stock but aims to acquire a manufacturer focused on "strengthening the American economy."
Currently, SPAC investments are concentrated in sectors closely aligned with the "America First" agenda, including nuclear energy, quantum computing (both government priorities), and, of course, cryptocurrency. "We know Trump and his children are heavily involved in cryptocurrency," stated Matt Tuttle, CEO of Tuttle Capital Management, overseeing $5 billion in assets. "These sectors are indeed performing well, but if a SPAC is initiated without any connection to Trump, it’s essentially the same old story." SPACs are publicly traded shell companies with the singular goal of raising funds to acquire a private company. The acquired company then inherits the SPAC's public listing credentials, providing a less stringent pathway to market compared to traditional Initial Public Offerings (IPOs), earning them the moniker "shortcut to going public."
Though the SPAC concept has been around for decades, it saw a surge in popularity in 2020, attracting participation from celebrities, athletes, and Wall Street titans. As the market was flooded with SPACs, many began merging with companies of questionable quality, claiming potential revenues of up to 300 times growth; this led to regulatory scrutiny from the SEC and lawsuits from investors citing losses against SPAC sponsors. The SEC, under the Trump administration, relaxed related restrictions, which MAGA figures readily capitalized on. Lutnick's SPAC is planning to merge with "Twenty One Capital," a Bitcoin company with ties to SoftBank Group and Tether Holdings. Another SPAC under Lutnick is merging with an organization called "BSTR" (Bitcoin Standard Treasury Co.) to invest in Bitcoin tokens. Palihapitiya has raised $300 million for "American Exceptionalism Acquisition Corp. A," a SPAC aiming to acquire a company involved in sectors favored by Trump, such as decentralized finance and artificial intelligence. Its stock price increased 13% in the initial weeks post-listing, making it one of the best-performing SPACs yet to announce a merger.
Data shows that as of October 17, among over 150 SPACs that have filed for IPOs or completed fundraising this year, more than a quarter have targeted industries aligned with Trump's policy agenda. University of Florida finance professor Jay Ritter highlighted several such transactions, including collaborations between Trump-affiliated media companies and cryptocurrency holding companies, and the merger of a SPAC with a gun startup where Donald Trump Jr. is a board member. "This is crony capitalism at play," he noted, "the Trump family is clearly unfazed in these dealings."
White House spokesperson Kush Desai stated, "The President's personal assets are held in a trust managed by his children and are unrelated to his presidential decisions; furthermore, all members of this administration are strictly adhering to government ethics standards." Critics of SPACs warn that such investments carry high risks: since 2019, only about 11% of companies that went public via SPAC mergers have stock prices above their initial offering prices, with dozens declaring bankruptcy just months after listing. Meanwhile, since the end of 2018, the S&P 500 index has more than doubled, and the Nasdaq 100 index has nearly tripled. "The success rate of SPACs does not justify their risks," commented Greg Martin, managing director of brokerage Rainmaker Securities. "These companies are likely unable to go public through traditional means."
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