SPAC mafia
How a bubble deflated
Good morning, my fellow skeptical equity analysts. This is your Stock Market Rundown for August 30, 2023. Thank you so much, today and every day, for reading. Let’s dig in:
TODAY’S TOP STORY: BUBBLE TROUBLE 🫧
A stock price that plummets by 90% is not how any CEO envisions their public debut. But the backstory of one recent such faceplant illustrates how a specific class of transactions—SPACs—have gone from hero to zero.
SPAC stands for “special purpose acquisition vehicle”, and it’s an unconventional path for private companies to go public. In a SPAC, a publicly-traded shell raises money, then merges an operating business into the public vehicle. If this sounds ass-backwards, well, there’s a reason SPACs have traditionally been the Charlie Sheen of the investment banking world.
Thanks to more lax rules than traditional IPOs, firms taken public by SPACs may not have business plans—or even revenue. But despite their sketchy rep, SPACs became super-trendy in the early pandemic, partly due to every jabroni with a Robinhood account and a government stimulus check deciding he was the next Warren Buffett.
Despite leadership gaffes and accusations of misleading financials, Better.com recently went public via SPAC; the stock was instantly decimated, crashing on its debut trading day.
Other SPACs are similarly sucking, as higher interest rates and more regulatory scrutiny have popped the bubble. But not before the “SPAC mafia” of insiders and investment bankers made billions, with retail investors left holding the bag. When participating in a market frenzy, always remember what Uncle Warren said: “If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.”
SO WHAT ELSE IS GOING ON?
Ain’t that a kick in the head: Nike’s stock has been struggling, with the company losing billions in market value due to markdowns, logistics costs, and trendy upstarts like Hoka (that brand with the goofy moon-boot heel) stealing share.
Top housing economists are predicting that US home prices will continue to surge in the near future, due to to limited inventory. Can’t swing a mortgage? Find a spare shipping container on the side of the road and decorate it with a few throw pillows. Cozy.
American Airlines just got slapped with a big fine for leaving passengers stranded on the tarmac for hours on end with no food or water. This customer service disaster could’ve been easily avoided by simply handing out free mini-bottles of vodka from the beverage cart to passengers as a polite “sorry for the inconvenience”.
Thanks for all your hard work, ladies: the owner of OnlyFans just gifted himself a $338 million dividend, and he didn’t even have to flash his twig and berries on the World Wide Web to earn it.
That’s it for today my homies, see you bright and early tomorrow. Yours in capitalism, The Axe