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SPAC stocks - the new hot thing in the market

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  • Sep 21st, 2022 8:43 pm
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SPAC stocks - the new hot thing in the market

After the very red-hot success of Nikola, Hyliion, STEM, Lucid, etc to name a few, there is an increased interest in SPAC or blank-check companies that are already listed in exchanges and looking for acquisition-merger with promising companies for IPO. This thread is for such SPAC stocks for investors.
What is SPAC:
A special purpose acquisition company (SPAC) is an entity that's set up as a company with no existing business purpose of its own. Each SPAC make an acquisition of an existing business which are not publicly traded. It does a merger with such an existing business and from then on, the SPAC takes on the identity of the business that it's acquired and gets traded.
The trend started and caught attention when VectorIQ the SPAC was trading at around $10 until the news broke out on the Nikola merger and was later trading at $34 on the day before it got listed as Nikola. And on Nikola's listing day, it started trading at over $65 and went all the way close to $90. That's a return of 8X within a span for 3-4 months.
Risks:
  • The trading price post merger could be lower
  • The deal could be called off despite the companies confirming initially which means investors have to wait more and price will come down.
Warrants
Warrants is somewhat similar to Call option. In 90% scenarios, holders can redeem warrants to get common shares of the same company after merger by paying extra $11.50. However, as part of merger documents, the SPAC will enlist the condition - e.g. the commons should trade above $18 for a min of 20 days within a 30 day period before warrants can be redeemed. The warrants has a shelf life of 5 years after merger is completed.
During its IPO, the SPAC gets launched as "Units" which will then split into "Commons" and "Warrants". The no. of warrants will be quite less than commons - e.g. The ratio of 1/3 means every 1 Unit has 1 common and 1/3 warrants. Warrants give huge leverage on investments. A typical SPAC with 1/3 warrants will trade around $3 when the commons are at $11-12. And it follows a non-linear path and many will be reluctant to buy warrants at above $50 even if commons trades above $100. When DWAC Spac (Merging with Trump's Social Media) was trading at $150+, the warrants were around $70.

Feel free to contribute to anything related to SPAC in this forum.
Last edited by AlexPete on Nov 9th, 2021 9:07 pm, edited 5 times in total.
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What is a SPAC?
simple definition :
A 19 yrs old gold digger that looking for a sugar daddy!

How successful this relationship is? Ask the sugar daddy
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SPAC def'n: The new name for the 40 year old "Shell Company" playbook that retired VSE promoters used.
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Bill Ackman's $4 Billion IPO (the biggest ever SPAC) got listed on Jul 23 as units (to be split as stock and warrants in couple of months) under the ticker PSTHU. Its aiming for matured cos like AirBNB (just an example). Floor price was $20 and traded at around $21.5 on Day 1.
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I always think of SPAC as SPEC(ulation), it's just that, FOMO stocks until they aren't

Take NKLA
It went to $90 and now it's $35

SPCE went to $40 and down to $15, now to $24-$27 again

They move on ANYTHING, or NOTHING
Which Credit Cards to sign up? >> Jerry's Mega Thread of Credit Cards Q&A
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That’s why it’s important to invest before the pre-merger or reverse ipo happens. Why should one had waited for Nikola to trade when they could have purchased Vectoiq (SPAC) even on the day before Nikola was traded. I purchased Vectoiq at $16 after the merger announcement and sold half at $68 after it changed to Nikola.
There are dozens of activate and inactive SPAC and choose and invest wisely after any deal is announced and all will have ample time to evaluate and invest before the merger.
SHLL and SPAQ could be the next Nikola with their Hyliion and Fisker deals respectively. All have 1-2 more months to invest at their pre-merger price currently.Smiling Face With Smiling EyesSmiling Face With Smiling Eyes
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I think they are great medium term investments if you can get in near the bottom $10-15. Once FOMO comes, and depending on the target, you can then start banking. But you can also see that sometimes after the merger, things aren't always on the sunny side. Take $GPAQ and $HOFV (after merger ticker), concept sounds amazing but it has lost quite a bit since the ticker change.
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I think Al Rosen railed against this. There was an article, not sure who or when, about how Chinese companies were swindling Western investors through reversed merger.

Bought SPCE, and DKNG before I read up on SPAC. SPCE because of Branson and space tourism sounds interesting. DKNG because it's a gambling stock. Can't go wrong. Made money on SPCE and down about 25% of DKNG.

Bought 200 shares of CCXX, after I read up on SPAC. And this was the latest stock. Currently, down 14%. And I have no clue what the stock is for. Pure gambling that it will take off ala NKLA and SPCE for the first few months.
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Utz, one of the biggest snacks company is going to debut by end of this week through a reverse merger with a SPAC company - CCH.
CCH currently trades around $14 and is expected to go $18+ post merger. Utz is into its 100 year, consistent profit making and growing 10-15% annually. Expects to pay $0.20 as dividend this year.
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It seems many are now focusing on ipo via SPAC and the space is now having good quality companies. All the prices I mentioned in my initial post on Jul 18 had given excellent returns.
The SHLL stock which was was trading at $23 is now $50 and poised to grow even more as the merger with Hyliion is expected in a couple of weeks.
The SHLL warrants which was $7 is now $21 giving the highest returns!
Happy investing Smiling Face With Smiling Eyes
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alanbrenton wrote: What would be some good ones to get into?
For short term, SHLL is expected to go up 50-100% in 2-3 weeks time. For medium term, OPES (merging with BurgerFi), SPAQ (merger with Fiscker EV) looks good for the price currently at $13-16. Im planning to switch from SHLL to these two by end of this month.
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add $kcac .. EV play.. bill gates + volkswagen.. I had chance to add around $16 but missed the boat.. this will swing until s1 filing..
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gskn4u wrote: add $kcac .. EV play.. bill gates + volkswagen.. I had chance to add around $16 but missed the boat.. this will swing until s1 filing..
True...Im waiting for it to cool down after the initial bumps and still have 3 months for the merger :)
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AlexPete wrote: For short term, SHLL is expected to go up 50-100% in 2-3 weeks time. For medium term, OPES (merging with BurgerFi), SPAQ (merger with Fiscker EV) looks good for the price currently at $13-16. Im planning to switch from SHLL to these two by end of this month.
What do you think about Kensington with Quantumscape?
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Quantumscape apparently looks a good investment; need to look at the finer transaction terms, equity dilutions etc to see a fair target. Currently it went up too much in just two days and anytime it can come down due to profit taking...I wont touch it now, and has atleast 3 months for the merger. No need to FOMO at this stage imho :) we have seen almost all spacs going up and coling down by 50% from its lows for a longer period before going up again.
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DiamondPeak Holdings (DPHC) is all set to merge with Lordstown Motors, an EV company manufacturing trucks. It has the first mover advantage with production starting next year itself and has $1.5 Billion orders much ahead of Tesla and Nikola. Currently trading at $20, this can easily go to $40-50 within a month with the appeal of EV industry.
The merge is expected in October.
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ChargePoint Inc, one of the world's oldest and largest electric vehicle charging networks, is nearing a deal to go public through a reverse merger with a SPAC company...Switchback Energy Acquisition Corp.
Though it’s not confirmed, would be a big opportunity to get into Charge Point at a cheap price of mid 10’s currently and is expected to go $30 + on merger within 3 months.

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