It is important to understand that a Special Purpose Acquisition Company (SPAC) is a company without any commercial activities related to the acquisition or merger of another company and is formed solely for the purpose of raising capital through an initial public offering (IPO).
SPACs, which are also known as blank check companies, have existed for decades, but they have become a lot more popular in recent years, as their popularity has skyrocketed. A record number of 247 SPACs were created at a cost of $80 billion in the year 2020, while a record number of 613 SPAC IPOs were conducted in the year 2021. On the other hand, only 59 SPACs came to market in 2019 in comparison to the number of SPACs in 2018.
Investors or sponsors who have expertise in a particular industry or sector commonly form Special Purpose Acquisition Corporations (SPACs) as a way to pursue deals related to that in-depth knowledge. A SPAC may decide to acquire another company during the IPO process, but the founders do not specify which company they are targeting in order to avoid disclosures during the process.
The companies are labeled “blank check companies,” as they provide investors with very little information prior to their decision to invest in a public offering. The companies seek underwriters and institutional investors before releasing their shares for the public. A boom period in the SPAC sector occurred during the 2020-2021 period, in which they attracted prominent names such as Goldman Sachs, Credit Suisse, and Deutsche Bank, in addition to retired or semi-retired senior executives who were seeking out SPAC opportunities.
Advantages and Risk Of SPAC
It can be advantageous for companies that have been planning to operate on the public markets to choose SPACs. An SPAC can be set up in a few months and be ready for public offering in a matter of months before the IPO itself takes place, while a conventional IPO can take eight months to more than a year.
Moreover, due to the limited timeframe available for initiating a deal with a SPAC, it may also be possible for the owners of the target company to negotiate a higher price when selling to one. As a result of being acquired by or merging with an SPAC that is sponsored by prominent financiers and business leaders, the target company is provided with experienced management and will have higher market visibility than if they were acquired by or merged with another company.
The popularity of SPACs in 2020 was perhaps triggered by the global pandemic which led to several companies choosing to forgo conventional IPOs because of uncertain and volatile market conditions, resulting in the emergence of SPACs.
Investment For Future:
Those who invest in a SPAC IPO are trusting that in the future, the promoters will be successful in acquiring or merging with a suitable target company and will take advantage of the opportunity. As a result, in addition to the lack of oversight from regulators, the Securities and Exchange Commission (SEC) does not disclose everything it knows about the SPAC, so retail investors have the risk of overhyping the investment or even being scammed.
Even though the bubble created by special purpose acquisition companies (SPACs) burst months ago, investors are still hesitant to put money into these assets. This has proven to be true with both companies that have “de-SPAC’ed”, and with companies that have deals pending while their SPAC stocks have “de-SPACed”. SPAC stocks may be a good investment in 2022 due to the current lack of interest among investors in the space.
Here in this article Stocks Telegraph is presenting you the 5 best SPAC stocks to invest right now.
26 Capital Acquisition
The stock of 26 Capital Acquisition Corp. (ADER) lost -0.05% to complete the last trading session at $9.84. The price range of the company’s shares was between $9.84 and $9.84. It traded 2084.0 shares, which was below its daily average of 74419.0 shares over 100 days. ADER’s shares have gained by 0.05% in the last five days, while they have added 0.20% in the last month. Further, it is currently trading at a price to earnings ratio of 55.59 and a price to book ratio of 1.34.
26 Capital Acquisition Corp. (ADER) has a 20-day trading average at $9.83 and the current price is -0.81% off the 52-week high compared with 2.50% distance from its 52-week low. The 50-day simple moving average of the closing price is $9.86, and its 200-day simple moving average is $9.84. If we look at the stock’s price movements over the week, volatility stands at 0.08%, which increases to 0.09% over 1 month. It is also key to look at other market indicators of price movement for the stock, where we see that the relative strength index (RSI) is at 49.69 to suggest the stock is neutral.
SoFi (SOFI) stock added 5.29% to finish last trading session at $6.97. The stock recorded a trading volume of 24.58 million shares, which is below the average daily trading volume published for the last 50 days of 40.49 million shares. The shares of company have retreated 17.14% in the last five days; however, they have gained 22.28% over the last one month. The stock price has shed -5.94% over the last three months and has lost -53.72 percent so far this year. Additionally, it has a price to sales ratio stands at 15.34.
The top 3 mutual fund holders in company are Vanguard Total Stock Market Index, Vanguard Small Cap Index Fund, and T Rowe Price Growth Stock Fund. Vanguard Total Stock Market Index owns 20,202,667 shares of the company’s stock, all valued at over $106.47 million. The company bought an additional 3.69 million shares recently to bring their total holdings to about 2.21% of the shares outstanding. Vanguard Small Cap Index Fund bought 3.18 million shares to see its total holdings expand to 17,358,221 shares valued at over $91.48 million and representing 1.90% of the shares outstanding. T Rowe Price Growth Stock Fund sold -0.23 million shares to bring its total holdings to over 12.39 million shares at a value of $65.28 million. T Rowe Price Growth Stock Fund now owns shares totaling to 1.35% of the shares outstanding.
Hims & Hers Health
On Wednesday, shares in Hims & Hers Health Inc. (HIMS) rise 5.57% to close the day at $6.06. The volume of shares traded was 2.27 million, which is lower than the average volume over the last three months of 2.34 million. During the trading session, the stock oscillated between $5.68 and $6.195. The company had an earnings per share ratio of -0.36. HIMS’s stock has gained 11.81% of its value in the previous five sessions and 39.31% over the past one month but has lost -7.48% on year-to-date basis. The stock’s 50-day moving average of $4.33 is above the 200-day moving average of $5.49. Moreover, the stock is currently trading at RSI of 78.28.
Looking at the support for the HIMS, several firms have released research notes about the stock. SVB Leerink stated their Underperform rating for the stock in a research note on July 15, 2022. Guggenheim coverage for the Hims & Hers Health Inc. (HIMS) stock in a research note released on April 14, 2022, offered a Buy rating with a price target of $10. Guggenheim coverage for the Hims & Hers Health Inc. (HIMS) stock in a research note released on April 14, 2022, offered a Buy rating with a price target of $10. Credit Suisse was of a view on April 01, 2022, that the stock is Outperform, while Deutsche Bank gave the stock Hold rating on March 10, 2022. Jefferies on their part issued Hold rating on December 02, 2021.
On Wednesday, shares in Skillz Inc. (SKLZ) rise 11.89% to close the day at $1.60. The volume of shares traded was 9.92 million, which is lower than the average volume over the last three months of 10.50 million. During the trading session, the stock oscillated between $1.43 and $1.61. The company had an earnings per share ratio of -0.69. SKLZ’s stock has gained 25.98% of its value in the previous five sessions and 17.65% over the past one month but has lost -78.49% on year-to-date basis. The stock’s 50-day moving average of $1.5528 is above the 200-day moving average of $4.9833. Moreover, the stock is currently trading at RSI of 57.73.
GAFFNEY CHRISTOPHER S, a Director at the company, sold 250,000 shares worth $2,141,300 at 8.57 per share on Dec 22. The Chief Technology Officer had earlier sold another 70,044 SKLZ shares valued at $0.9 million on Nov 08. Aguirre Miriam (Chief Technology Officer) sold 439,431 shares at 10.34 per share on Aug 19 for a total of $4.55 million while SLOAN HARRY, (Director) bought 100,000 shares on Mar 14 for $227,000 with each share fetching 2.27.
On Wednesday, shares in Opendoor Technologies Inc. (OPEN) rise 2.35% to close the day at $5.66. The volume of shares traded was 14.19 million, which is lower than the average volume over the last three months of 17.93 million. During the trading session, the stock oscillated between $5.49 and $5.85. The company had an earnings per share ratio of -0.61. OPEN’s stock has gained 8.22% of its value in the previous five sessions and 17.18% over the past one month but has lost -61.26% on year-to-date basis. The stock’s 50-day moving average of $5.95 is above the 200-day moving average of $11.44. Moreover, the stock is currently trading at RSI of 52.31.
Looking at the overall sentiment about this stock we find that the community has adopted a bearish outlook, a sentiment shared by analysts offering their price forecasts for the stock for the next 12 months. 12 analysts have given Opendoor Technologies Inc. (OPEN) a consensus price target of $12.70, which is noticeably above its current trading value. The analysts estimate the stock will hit a 12-month high of $24.00, while a downturn for the stock is likely to see it drop to a low of $6.00. When we calculate the distance from the median price, we find that the stock will move 37.11% from its price at the previous close to touch the estimated average price. An upside towards the 12-month high will see the stock climb 76.42%, while a decline to the 12-month low will see the stock lose 5.67 of its current value.