If there’s one thing Wall Street loves, it’s a good trend. Whether it be the latest tech innovation or gimmicky product, trends are what define the markets. And perhaps the biggest trend in recent quarters – aside from pandemic plays – has been so-called special purpose acquisition companies, or SPACs. Numerous SPACs have launched on the major exchanges and several have gone on to surge in price. More are being IPO’d every week.
In essence, Wall Street has SPAC fever.
The bigger question is should we care?
Historically, SPACs have been a mixed bag for investors, especially longer-term ones and those seeking income. And there are some cautionary elements we need to consider. The last time “blank check companies” were popular was in 2008 and 1999. And we know what happened in those years.
For investors, SPACs may be an interesting growth element, but it’s one that warrants careful consideration and ignoring the fever behind them.
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