The fact that a public company doesn't have a working product just blows my mind.
Supposedly it’s about giving founders certainty, but if the investors in the SPAC want to take the founder’s company public then they must think the price they’re giving them is under market.
Best interpretation of this is founders not wanting to deal with the hassle of an IPO (or preferably DPO) and are willing to take that lower price to avoid the logistics (which doesn’t inspire much confidence in the founders for me).
I suspect a lot these are just about grifting money from the public while passing off a dying company. Cashing out quickly for SPAC investors and founders.
Nikola in particular is basically fraud and going to zero, just hard to know when. I think it’s too difficult to make money with a short position, this biases the market to support this kind of failed company longer than it should.
I heard about this on 99% invisible:
Sounds like I should just go to Robinhood and put all my money on it
This is a reverse merger. SPACs, or blank-cheque companies, involve a reverse merger. But they’re a specialised case of them.
In the case of AirBnB with their $93b market cap to get a P/E of say 35, they would need to generate $2.6b in profit, so could they do that and not crater their market?
Here's the secret, you give me $1 and I give you $1.20 in return . rinse and repeat ad infititum
What profit means for a company is essentially: "Across my entire company, of all the things I could be doing, I couldn't find a single initiative that I believe will yield me a risk adjusted ROI that is greater than just leaving the money in a bank account."
Growing companies shouldn't be making a profit because they should be limited by their ability to execute on attractive growth opportunities fast enough. Mature companies can make profits because they've reached the limits of their attractive growth and now can be focused on harvesting the rewards.