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Shares of companies to buy special targets are slipping after the buy-in ads, significantly reversing their enthusiasm for vehicles this year, which could threaten their ability to do business.
Of the 13 Spacs that announced purchases in May, only one is trading at more than $ 10, the level at which shares of white-checked companies were originally priced, according to the Financial Times analysis by Refinitiv data.
As of March, nine out of 10 traded more than $ 10 as a result of the announcement of the deal, according to Spac Research, and many more.
Market experts have blamed institutional investors for the withdrawal from the market and the lack of interest from retailers, who have focused on other speculative assets, such as cryptocurrencies.
“The retail component of the agreements has been a big problem,” said Ari Edelman, a partner at Reed Smith. “A lot of the activity around Spacs was about negotiating stock trading and Spacs’ success was based on retail.”
Space boom largely promoted by hedge funds those who buy first in the structure and use the lever to achieve profitability. But most are sold after an agreement is announced and are replaced by new investors eager to get a share of the newly listed company. It seems that this is no longer the case.
“Retirement by retail investors has been very bad,” said a large Spac sponsor. “Retail trade spurred huge speculation from September until bubble burst [in April] and now the Spac market is dead, dead, dead. ‘
A few weeks ago, Spaces the “price” of the share price was almost certain when the company announced its intention to merge. Sometimes even rumors of a deal, as with Michael Klein’s Churchill Capital IV and Lucid Motors, raised the shares of the empty check company by 80 or 90 percent.
Now, even large transactions with well-known names do not attract investors.
The space, created by Soaring Eagle Acquisition, the sponsor of the series and former Hollywood executive Harry Sloan, is trading below $ 10, despite last week announcing a $ 17.5 billion deal to take over the public Ginkgo Bioworks sponsored by Bill Gates. Equity shares in Aurora Acquisition have also fallen 10 percent since SoftBank-backed mortgage lender Better announced a $ 6.9 billion deal.
If the trend continues, Spac may be forced to repeat its agreements to gain shareholder approval. Investors return about $ 10 in cash if they decide against the deal and repurchase their shares, which is why the $ 10 threshold is important.
Aeye, which makes lidar sensors used for autonomous driving, this month ratified the deal with Spac-backed Cantor Fitzgerald, agreeing in February to a $ 1.9 million cut in the $ 1.9 million valuation. The company referred to the trading of public lidar companies and the “changing conditions of the automotive lidar industry” to make up the difference.
Additional news from Madison Darbyshi
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