Today we cover $DNA, $FMAC, $ITAC and more…
Short-seller firm Scorpion Capital has just claimed that the business model of Ginkgo Bioworks is ‘Hocus-Pocus’ and a ‘Colossal Scam’. The 175-page report, which includes statements from current and former Ginkgo employees and other connected companies, drove Ginkgo stock down 20% intraday.
Scorpion claims that the bulk of Ginkgo’s revenues are non-cash based, instead of relying on accounting gimmicks through a web of shell companies. The report includes claims from Ginkgo’s customers, who state that they never made any cash payments to Ginkgo for foundry services, but instead used ‘free’ R&D credits following investments by Ginkgo and Viking.
Former short-seller Citron Research believes that the company’s valuations are inflated by misaligned incentives of the parties that brought it public, adding that it dwarfs Ginkgo’s private funding in 2020 of about $5 billion.
Ginkgo went public through a SPAC merger with Soaring Eagle Acquisition Corp, in a deal valuing the firm at $15 billion. At market close on Wednesday, the company commanded a valuation of $19.69 billion.
Internet Services Provider Starry Inc is in advanced talks with SPAC FirstMark Horizon Acquisition Corp for a potential deal that would value the combined company at more than $1.5 billion. FirstMark Horizon raised $414 million in an IPO a year ago and is backed by venture capital firm FirstMark.
The company will also raise $100 million in PIPE funding to support the deal. Starry is currently available in Boston, New York, Washington, Denver, and Los Angeles. The company has partnerships with residential property owners including JPMorgan Chase & Co’s Asset Management unit and Brookfield Properties.
Starry was established by Chet Kanojia, who previously founded internet television service Aereo.
Aereo’s business model involved capturing over-the-air television signals and streaming them to subscribers. After a legal battle with broadcasters that went all the way to the Supreme Court, the company lost the battle and had to file for bankruptcy.
Cathie Wood is buying the dip in Ginkgo Bioworks by adding 8 million shares of the company to ARKG and ARKK.
Industrial Tech Acquisition is Merging with Arbe Robotics, which is an autonomous driving radar chip company. After redemptions, ITAC will have a low float of 1.8 million, allowing for a potential gamma squeeze.
SPAC Redemption Rates in September
SPAC Sponsor Betsy Cohen believes that 30% of all SPACs currently in the market will fail. Cohen states that SPACs either won’t be able to find companies in the time frame or will find companies that public market investors won’t approve of.
Cohen also added that while PIPE (private investment in public equity) placements have been common in deals to help validate the valuations in transactions, circumstances have now changed.
Private Equity Firms are now increasingly funding PIPE placements and which can be a conflict of interest if they are also a sponsor of the deal. Cohen, who is a SPAC veteran after having raised nine SPACs and completing deals like taking investment bank Perella Weinberg Partners public, remains bullish on the broad SPAC market.
Cohen is looking at foreign exchanges in Frankfurt, Amsterdam, Paris, and Singapore for a potential SPAC listing.