Yahoo Finance’s Julie Hyman, Brian Sozzi, Myles Udland, and Andy Serwer discuss the SPAC frenzy amid COVID-19.
As Wall Street flits from one craze to the next; GameStop (GME), Bitcoin (BTC-USD) and now SPACs, the message is clear. If only we could act upon it. As a way of looking into this ongoing mania of mini-manias, I’ve turned my attention to the latest boom, SPACs, once a quirky, backwater of a security, now all the rage.
Let’s start with Kap, who has a SPAC.
That being former San Francisco 49ers quarterback, Colin Kaepernick—famous for taking a knee during the national anthem—who has co-founded Mission Advancement Corp, a SPAC, (the word rhymes with ‘clack’) or special purpose acquisition corporation, also known as a blank check company.
Kaepernick’s SPAC will look to invest in companies with a social justice mission. Oscar-nominated filmmaker Ava DuVernay and Silicon Valley VC Ben Horowitz are on its board of advisors. Private equity executive Jahm Najafi, part owner of the NBA’s Phoenix Suns, is the company CEO.
Not surprisingly there’s some eye rolling. “Colin Kaepernick becomes latest athlete to join Wall Street’s SPAC craze” read the New York Post headline (and indeed Shaquille O'Neal and Alex Rodriguez also have SPACs.) And then there’s Fox Business which framed it this way: “Colin Kaepernick plans to raise $250M for social justice SPAC: The board of directors is completely made up of Black, Indigenous and people of color and represented by a female majority.” (As you might imagine, the comments are toxic.)
Politics aside, will Kaepernick’s SPAC make any sense? Will it make any money? Kaepernick does have business experience working with Nike, Medium, Apple and others, and he’s not the CEO anyway. But the truth is, and by definition, we have no idea, because as a new SPAC, Mission hasn’t invested in anything yet. So who knows.
That’s the thing about SPACs. The more you dig into them, the more you realize they’re opaque and complicated. They’re also red hot. And that’s not necessarily a great combination.
The growth has been wack. In 2019, according to SPACInsider, 59 SPACs worth $13 billion were created. Last year there were 248 worth $83 billion. And already, just six weeks into this year, there are 135 SPACs which have raised $40 billion. Many more are on tap.
For the rest of Andy Serwer's article on SPACs please visit:
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