That's bad..but SPAC is known

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PingPing80
2022-12-26

That's bad..but SPAC is known for pump and dump with this trend created by traders.

SPAC Boom Ends in Frenzy of Liquidation

Many SPACs have said they would wind down, hurting backers such as venture capitalist Chamath Paliha

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·2022-12-26
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Now they are rushing to liquidate their creations before the end of the year, marking an ugly conclusion to the SPAC frenzy.</p><p>With few prospects for deals soon and a surprise tax bill looming next year, special-purpose acquisition companies are closing at a rate of about four a day this month, nearly the same pace they were being launched when the sector peaked early last year.</p><p>Roughly 70 special-purpose acquisition companies haveliquidated and returned money to investorssince the start of December. That is more than the total number of SPAC liquidations in the market’s history, according to data provider SPAC Research. SPAC creators have lost more than $600 million on liquidations this month and more than $1.1 billion this year, the data show.</p><p>Many more SPACs have said they would wind down in the coming weeks. The trend is hurtingprolific backerssuch as venture capitalistChamath Palihapitiyaand private-equity billionaireAlec Gores, wealthy former business executives likeGary Cohnand big Wall Street firms such asKKR&amp; Co. andTPGInc.</p><p>For many of the big SPAC creators, the losses have barely dented the fortunes they made during the mania. Mr. Palihapitiya, who saidhe would shutter two SPACsin September, told The Wall Street Journal that his investment firm made about $750 million across several deals. The firm, Social Capital Holdings Inc., took public companies like space-tourism firmVirgin Galactic HoldingsInc. and personal-finance appSoFi TechnologiesInc.</p><p>Those SPACs that came late to the game are often struggling to find deals. Falling stock prices and rising interest rates haveessentially frozen the market for new public listings, making it difficult for executives to meet their two-year deadline to find a deal. Many of those deadlines are coming up in the first half of next year.</p><p>A 1%federal tax on share repurchasesthat is part of new climate, health and spending legislation has accelerated liquidations. Winding down a SPAC and returning cash to the investors could be considered a repurchase of the company’s existing shares, which would face the buyback tax beginning next year. Some analysts project SPAC liquidation losses will top $2 billion in the coming months.</p><p>“Something people thought was going to be a fantastic vehicle for creating wealth is looking increasingly like a poisoned chalice,” saidJohn Chachas, co-managing principal at Methuselah Advisors, a boutique investment bank that has advised companies fielding an increasing number of calls from SPACs desperate to find deals.</p><p><img src=\"https://static.tigerbbs.com/5f7d08be8cbf3bbff7754fae8720b7f3\" tg-width=\"753\" tg-height=\"528\" width=\"100%\" height=\"auto\"/></p><p>Also called a blank-check company, a SPAC is ashell firmthat raises money from investors and lists publicly with the sole purpose of merging with a private company to take it public. After regulators review the deal and it is completed, the company going public replaces the SPAC in the stock market.</p><p>Such mergers burst onto the scene as popular alternatives to traditional initial public offerings in 2020 and 2021. The boom turned into a bust during this year’s market reversal.</p><p>An exchange-traded fund tracking companies that went public this way is down more than 70% this year, dragged down by losses in startups such as sports-betting firmDraftKingsInc. and electric car maker Lucid Group Inc. Companies that went public via SPACs haveperformed worsethan other newly public companies this year.</p><p>One characteristic of SPACs is that investors can get their cash back if they don’t want to participate in a deal. When the market was hot, investors often held shares in the newly public startups, expecting big returns or selling immediately if shares had already gone up. Now they arepulling out before the deals close, dramatically reducing the amount of cash companies can raise.</p><p>SPACs are now paying less for companies than they did during the sector’s peak. The average valuation of startups announcing SPAC mergers has fallen to about $400 million this quarter from more than $2 billion for most of last year, Dealogic data show. Roughly 300 companies have gone public through SPACs in the last two years.</p><p>There are still nearly 400 SPACs together holding about $100 billion that have yet to find deals, according to SPAC Research. If roughly 200 of the SPACs liquidated, the losses for creators would be well above $2 billion, said New York University Law School professorMichael Ohlrogge, whostudies SPACs. SPAC creators have lost about $9 million on average through liquidations this year, money they paid to banks and law firms to set up the shell companies.</p><p>There are another roughly 150 SPACs holding about $25 billion that have reached merger agreements but haven’t closed them, including a blank-check firm that is trying to take publicDonald Trump’s social-media company, according to SPAC Research. Some of those will likely get called off, meaning liquidation losses could end up being even greater than expected.</p><p>To some observers, this year’s losses show why SPACs are inefficient for companies seeking to raise money or go public.</p><p>“It just emphasizes the needlessly wasteful aspects of the SPAC structure,” said Mr. Ohlrogge, who has proposed companies could get the benefits of a blank-check merger while doing a variation of a traditional IPO or direct listing.</p><p></p></body></html>","source":"wsj_highlight","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>SPAC Boom Ends in Frenzy of Liquidation</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSPAC Boom Ends in Frenzy of Liquidation\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-12-26 07:29 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.wsj.com/articles/spac-boom-ends-in-frenzy-of-liquidation-11671917668?mod=hp_lead_pos1><strong>The Wall Street Journal</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Many SPACs have said they would wind down, hurting backers such as venture capitalist Chamath Palihapitiya.During the boom in blank-check companies, their creatorscouldn’t launch them fast enough. Now...</p>\n\n<a href=\"https://www.wsj.com/articles/spac-boom-ends-in-frenzy-of-liquidation-11671917668?mod=hp_lead_pos1\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".DJI":"道琼斯",".IXIC":"NASDAQ Composite",".SPX":"S&P 500 Index"},"source_url":"https://www.wsj.com/articles/spac-boom-ends-in-frenzy-of-liquidation-11671917668?mod=hp_lead_pos1","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1170769478","content_text":"Many SPACs have said they would wind down, hurting backers such as venture capitalist Chamath Palihapitiya.During the boom in blank-check companies, their creatorscouldn’t launch them fast enough. Now they are rushing to liquidate their creations before the end of the year, marking an ugly conclusion to the SPAC frenzy.With few prospects for deals soon and a surprise tax bill looming next year, special-purpose acquisition companies are closing at a rate of about four a day this month, nearly the same pace they were being launched when the sector peaked early last year.Roughly 70 special-purpose acquisition companies haveliquidated and returned money to investorssince the start of December. That is more than the total number of SPAC liquidations in the market’s history, according to data provider SPAC Research. SPAC creators have lost more than $600 million on liquidations this month and more than $1.1 billion this year, the data show.Many more SPACs have said they would wind down in the coming weeks. The trend is hurtingprolific backerssuch as venture capitalistChamath Palihapitiyaand private-equity billionaireAlec Gores, wealthy former business executives likeGary Cohnand big Wall Street firms such asKKR& Co. andTPGInc.For many of the big SPAC creators, the losses have barely dented the fortunes they made during the mania. Mr. Palihapitiya, who saidhe would shutter two SPACsin September, told The Wall Street Journal that his investment firm made about $750 million across several deals. The firm, Social Capital Holdings Inc., took public companies like space-tourism firmVirgin Galactic HoldingsInc. and personal-finance appSoFi TechnologiesInc.Those SPACs that came late to the game are often struggling to find deals. Falling stock prices and rising interest rates haveessentially frozen the market for new public listings, making it difficult for executives to meet their two-year deadline to find a deal. Many of those deadlines are coming up in the first half of next year.A 1%federal tax on share repurchasesthat is part of new climate, health and spending legislation has accelerated liquidations. Winding down a SPAC and returning cash to the investors could be considered a repurchase of the company’s existing shares, which would face the buyback tax beginning next year. Some analysts project SPAC liquidation losses will top $2 billion in the coming months.“Something people thought was going to be a fantastic vehicle for creating wealth is looking increasingly like a poisoned chalice,” saidJohn Chachas, co-managing principal at Methuselah Advisors, a boutique investment bank that has advised companies fielding an increasing number of calls from SPACs desperate to find deals.Also called a blank-check company, a SPAC is ashell firmthat raises money from investors and lists publicly with the sole purpose of merging with a private company to take it public. After regulators review the deal and it is completed, the company going public replaces the SPAC in the stock market.Such mergers burst onto the scene as popular alternatives to traditional initial public offerings in 2020 and 2021. The boom turned into a bust during this year’s market reversal.An exchange-traded fund tracking companies that went public this way is down more than 70% this year, dragged down by losses in startups such as sports-betting firmDraftKingsInc. and electric car maker Lucid Group Inc. Companies that went public via SPACs haveperformed worsethan other newly public companies this year.One characteristic of SPACs is that investors can get their cash back if they don’t want to participate in a deal. When the market was hot, investors often held shares in the newly public startups, expecting big returns or selling immediately if shares had already gone up. Now they arepulling out before the deals close, dramatically reducing the amount of cash companies can raise.SPACs are now paying less for companies than they did during the sector’s peak. The average valuation of startups announcing SPAC mergers has fallen to about $400 million this quarter from more than $2 billion for most of last year, Dealogic data show. Roughly 300 companies have gone public through SPACs in the last two years.There are still nearly 400 SPACs together holding about $100 billion that have yet to find deals, according to SPAC Research. If roughly 200 of the SPACs liquidated, the losses for creators would be well above $2 billion, said New York University Law School professorMichael Ohlrogge, whostudies SPACs. SPAC creators have lost about $9 million on average through liquidations this year, money they paid to banks and law firms to set up the shell companies.There are another roughly 150 SPACs holding about $25 billion that have reached merger agreements but haven’t closed them, including a blank-check firm that is trying to take publicDonald Trump’s social-media company, according to SPAC Research. Some of those will likely get called off, meaning liquidation losses could end up being even greater than expected.To some observers, this year’s losses show why SPACs are inefficient for companies seeking to raise money or go public.“It just emphasizes the needlessly wasteful aspects of the SPAC structure,” said Mr. Ohlrogge, who has proposed companies could get the benefits of a blank-check merger while doing a variation of a traditional IPO or direct listing.","news_type":1},"isVote":1,"tweetType":1,"viewCount":643,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":69,"xxTargetLangEnum":"ORIG"},"commentList":[{"id":105340670,"commentId":"105340670","gmtCreate":1672025920251,"gmtModify":1672025933406,"authorId":3558617926022722,"author":{"id":3558617926022722,"idStr":"3558617926022722","authorId":3558617926022722,"name":"kkennn","avatar":"https://static.tigerbbs.com/cfb6967409b5a69e663a7006e885e221","vip":1,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9925664705,"objectIdStr":"9925664705","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"<u>Yes</u>","text":"<u>Yes</u>","html":"<u>Yes</u>","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"invalid","coins":0,"score":0}],"hasMoreComment":true,"orderType":2}