In the IPO, a SPAC sells shares and warrants that then trade separately. SPACs have no operations at that point. They’re an entity stuffed with the funds they raised in the IPO, looking to acquire a company, such as a startup, within two years normally. After the acquisition, if approved by investors, the SPAC changes its name to the startup’s name and changes its ticker. In this manner, the startup can go public while avoiding the arduous disclosures and scrutiny a traditional IPO filing entails.
his arduous scrutiny was put in place to protect IPO investors. However, investors don’t give a hoot about protections anymore in the current mega-bubble craze. No one gives a hoot about anything anymore as long as this stuff goes up. See cryptos and NFTs, and well SPACs.
Dozens of SPACs that went public this year and late last year have either been created by, or used as figure heads star athletes, Hollywood celebrities, celebrities of all kinds, the former Speaker of the House Paul Ryan, former Commerce Secretary Wilbur Ross and, of course, Larry Kudlow, rapper Jay-Z, Gary Cohen, who was also President Trump’s chief economic advisor for a while, and Chamath Palihapitiya, former Facebook executive and current god of the traders hanging out on Reddit and Twitter, who has listed six SPACs so far.SPACs Are Lining Up as the Next WTF Chart of the Year | Wolf Street