A special purpose acquisition company (SPAC; /spæk/), also known as a "blank check company" is a shell corporation listed on a stock exchange with the purpose of acquiring a private company, thus making it public without going through the traditional initial public offering process.[1][2] According to the U.S. Securities and Exchange Commission (SEC), "A SPAC is created specifically to pool funds in order to finance a merger or acquisition opportunity within a set timeframe. The opportunity usually has yet to be identified".[3] SPACs raised a record $82 billion in 2020,[4] a period sometimes referred to as the "blank check boom".
There is even a SPAC ETF. There are a lot of listed SPACs that have hundreds of millions or more in cash sitting around seeking something to buy. The beneficiaries of SPACs are the owners of assets which are currently hot like Animoca. The early movers in the formation and listing of the SPAC also benefit. The risks come for the later entrants into the SPACs who pay a higher price than the original venture capitalists. The riskiest position is for investors who buy on market upon listing and some of these have lost money if their SPAC cannot find stellar performing assets like Animoca owns. I have an indirect interest in MP Materials which is a SPAC which was formed to buy up the rare earth assets of a bankrupt company called Molycorp. MP traded between USD11 to USD46 on the NYSE. Rare earths are hot like crypto, gaming and NFTs etc.
AB1 Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
