“THE SPAC FAD IS ENDING IN A PILE OF 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.
The SPAC fiasco winds down
By Thomas K. Brown,
BACKFIRING: Wall Street innovation—on the march!
“THE SPAC FAD IS ENDING IN A PILE
OF 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.