BREAKDOWN: SPACs 101... A Bubble, the Future or Both?

A primer on, and critical look at, one of Wall Street’s hottest trends: special purpose acquisition companies.

July 27, 2020

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Host

CoinDesk

A primer on, and critical look at, one of Wall Street’s hottest trends: special purpose acquisition companies.

This episode is sponsored by Bitstamp and Crypto.com.

Special purpose acquisition companies have been around since the 1990s, but have seen a significant uptick in popularity in recent years. Companies like Virgin Galactic, Draft Kings and Nikola have changed SPAC’s reputation from a tool for second- and third-tier private equity shops to win fees to a legitimate alternative to initial public offerings. In 2020, SPACs have made up roughly 40% of the IPO market.

Recently, chatter around SPACs reached a fever pitch with the listing of Bill Ackman’s Pershing Square Tontine Holdings - the largest-ever SPAC.

In this episode, NLW breaks down:

What a SPAC is
Standard SPAC terms
Why the traditional IPO process has generated growing discontent, especially from Silicon Valley
The benefits of SPACs for companies and investors
The downsides of SPACs for companies and investors
A number of reasons explaining why SPAC popularity is surging now
How Robinhood retail traders are creating an important bridge buyer for SPACs
Why Ackman’s Tontine Holdings SPAC could change how we think about SPACs in the future
Are SPACs a bubble?

Cited resources:

SPAC Man Begins - Alex Danco

SPACs as a Call Option on Hype - Bryne Hobart

SPACs: the most ludicrous bubble we’ll ever see… why not $IAC? - Yet Another Value Blog

Return of the SPAC - John Street Capital