![]() ![]() The WSJ estimates that of the 342 companies that did SPAC deals between 20 and filed a quarterly or annual report in the past three quarters with the Securities and Exchange Commission, 101 of them could run out of cash within a year based on their current spending. Many of them have already cut spending and are trying to raise cash. The reports are expected to show declining cash and little chance of turning profits quickly enough to avoid a bust. “That lifeline pulling them up was actually a hand on the neck to further their death,” said a manager of a SPAC-focused fund.įirst-quarter earnings reports coming in the next few weeks may cause many of these startups to go #bankrupt. Companies that went public via these #SPACs have since collectively lost more than $100 billion in market value. ![]() Many of these #startups were worth billions when they hit the market, attracting small investors excited at the prospects of space tourism, cryptocurrencies and electric cars. Once a deal is completed, the company going public replaces the SPAC in the stock market. Although SPACs have been around for decades, their popularity exploded in 2020 as an easy way for startups to go public. Instead, the WSJ argues these deals put them under pressure to deliver and left them vulnerable to rising interest rates and the volatility of public markets.Īlso called a blank-check company, a SPAC is a shell company that raises money from investors, then lists on a stock exchange with the sole intent of merging with a private company to take it public. SPAC deals were supposed to provide a big lift for these startups, giving them cash and a stock-market listing. Those that have raised cash have lost control of their companies. ![]() Many of their shares trade under $1, more than 90% down from when they went public, and are in danger of being delisted. More than 100 companies, including electric-scooter firm Bird Global, smart-sock baby-monitor maker Owlet, and electric-car startup Faraday Future Intelligent Electric, are running out of cash. ![]()
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