Notably, not a single SPAC was issued in July, according to CNBC’s calculations of SPAC research data. It appears market participants have turned their backs on SPACs as these equities with no track record commanded lofty valuations. Ultimately, most SPACs failed to meet expectations, which is one of the main reasons they’re no longer a hit in the markets. In essence, SPACs merge with a high-growth company that is looking to avoid the traditional initial public offering (IPO) process. Still, the struggle in 2022 could possibly be tied to rising interest rates and recession risks.
Worst of the bunch
On Squawk on the Street, David Faber, financial journalist, and author discussed SPACs that went public in 2021. He indicated that big-name SPACs have been a disappointment for investors, analyzing two in particular on August 10. He also added regarding PaySafe (NYSE: PSFE):
Liquidation starts
Besides the issuance drying up and some SPACs performing horribly, the number of liquidations is rising, with a total of ten liquidations in 2022 as opposed to only one in 2021. Faber weighed in on the state of SPACs:
Risk on play
The SPAC market represented a segment of the market swollen with enthusiasm and lofty valuations whose best year was 2021 when money seemed abundant. With talks of a recession, rising inflation, and investors taking a back seat on tech stocks, it was only logical that SPAC deals would dry up. Investors looking to get into the SPAC action should read through the statistics CNBC accumulated to better understand the level of risk before pulling the trigger. Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
