Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

The Meaning Of SPAC: A More Fitting Definition

By Tim KnightStock MarketsApr 01, 2021 01:44AM ET
www.investing.com/analysis/the-meaning-of-spac-a-more-fitting-definition-200570692
The Meaning Of SPAC: A More Fitting Definition
By Tim Knight   |  Apr 01, 2021 01:44AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Even just a couple of years ago, the notion that “blank check” companies (that is, publicly-traded shell corporations with no business, no revenue, no earnings, and no real purpose) would be one of the most popular vehicles for taking a company into the public markets would have been seen as laughable, if not scandalous.

We live in wacky times, however, so Space Purpose Acquisition Corporations (SPAC) stocks have been all the rage.

Having seen what appears to be a very typical pattern among these stocks, I would like to suggest a new definition to the acronym:

Scrutiny
Precludes
Ailing
Corporations

Because any legitimately promising organization has to go through the travails of a lengthy road show and all the deep examination of investment banks and the buying public before they achieve what so few private companies achieve, which is to become a publicly-traded financial instrument.

The “back door” that the SPAC provides allows sub-par companies to do the same thing without the discomfort of prying eyes.

As the examples below illustrate, it seems to me SPAC stocks are virtually guaranteed to be bad long-term investments since, even in this absurdly-supportive environment, the pathway tends to be:

  1. Almost no volume at all during the pre-acquisition time
  2. An actual acquisition, at which time the stock rockets higher, perhaps for months
  3. A stalling-out or high-volatility period, in which the rocketing stops and the gyrations begin
  4. The crash

I offer for evidence (and it didn’t take long to find these) Fisker (NYSE:FSR), Luminar Technologies (NASDAQ:LAZR), Lordstown Motors (NASDAQ:RIDE), Canoo (NASDAQ:GOEV) and ChargePoint Holdings Inc (NYSE:CHPT):

FSR Daily Chart
FSR Daily Chart
LAZR Daily Chart
LAZR Daily Chart
RIDE Daily Chart
RIDE Daily Chart
GOEV Daily Chart
GOEV Daily Chart
CHPT Daily Chart
CHPT Daily Chart

There are exceptions, of course, as the two items below—Virgin Galactic Holdings (NYSE:SPCE) and DraftKings (NASDAQ:DKNG)—illustrate. But these are definitely not the norm.

SPCE Daily Chart
SPCE Daily Chart
DKNG Daily Chart
DKNG Daily Chart
The Meaning Of SPAC: A More Fitting Definition
 

Related Articles

Tim Knight
DraftKings In A Very Dangerous Position By Tim Knight - May 07, 2021 3

This is a good real-life example of how charting can be very helpful in giving warnings that something is going wrong. Below is the chart of DraftKings Inc (NASDAQ:DKNG) without...

The Meaning Of SPAC: A More Fitting Definition

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
ivan shaw
ivan shaw Apr 17, 2021 12:57AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
ARD is another case with profits.  RMGBU is coming soon with powerful institutional investors behind.  Not every SPAC is a false hope.
Elize Kooi
Elize Kooi Apr 01, 2021 7:53PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
CHPT not a spac, get your information right! Used to be SBE before merger!
Bubba Born
Bubba Born Apr 01, 2021 6:00AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Same thing as stock with a "W" at the end of the symbol.. over 500 Warrants listed and 400 SPACs. Crazy the way the market is manipulated!
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email