BACKFIRING: Wall Street innovation—on the march!
“THE SPAC FAD IS ENDING IN A PILEOF BANKRUPTCIES AND FIRE SALES
“It took only 10 months for Quanergy Systems Inc., a maker of high-tech sensors and software, to go from its stock market debut to filing for bankruptcy. Fast Radius Inc., a 3D-printing company, made it nine months. Online retail startup Enjoy Technology Inc. lasted eight-and-a-half months before it filed.
“What these companies all have in common is the way they made it onto the market. Instead of selling shares in a conventional initial public offering, each of them merged with a special purpose acquisition company. . . . Such deals were a pandemic-era Wall Street fad—but now a growing number of ventures that went public in this way have gone bankrupt, highlighting how speculative the SPAC game could be.” [Emphasis added.]
I mean, sheer genius, right? Investment bankers figured out a way to collect big fees by selling SPACs—essentially, bags of nothing—to credulous investors who believed that the SPACs’ sponsors would be able to find forgotten, overlooked jewels to buy before a money-back deadline kicked in. Really, what was there to worry about? P.S. Nine months from IPO to BK really is impressive.