The Daily Dish (09/17/21)
Price spikes have become a bizarre side effect of SPACs with high redemption. Retail investors are now targeting SPACs whose shareholders exercise their right to ask for their money back instead of funding the deal.
Redemptions arise when a SPACs share price falls below $10, which has been happening a lot lately. In several instances, more than 90% of shareholders have cashed out. A byproduct of higher redemptions is a low float, which is making shares inherently more volatile, thus allowing retail investors to force the price higher.
The phenomenon is creating the birth of mini-sized meme stocks, similar to AMC and GameStop. But unlike those companies, SPACs can’t issue new stocks to take advantage, because if they do, that increases the float and shares would fall again.
Most price spikes will fizzle out relatively quickly as additional stock from PIPE investors becomes tradable, so low floats won’t remain low forever.
The date for the SPAC merger between VPC Impact Acquisition and Bakkt Holdings has been set for October 14th, 2021.
Spire Global stock surged 16% after a gamma squeeze redemption due to a low float (2 million shares outstanding).
The Singapore Exchange expects its first SPAC listing within the next few weeks according to CEO Loh Boon Chye. The exchange announced new SPAC rules earlier this month and expects a robust pipeline of potential listings.
92% of all SPACs listed globally have been concentrated in the US and have been the primary listing method for most companies looking to go public this year. Singapore has sought to boost IPO activity for years but has failed to clinch major tech listings that have been one of the hottest investment trends globally.
Singapore has announced that it would co-invest with state investment firm Temasek to help companies raise capital through public listings with an initial fund of $1.1 billion. Several other measures will also help companies to list in the city-state.
The investment arm of Singapore’s Economic Development Board will create a S$500 million fund for late-stage companies. The Monetary Authority of Singapore will increase grants to help companies with the cost of listing and the SGX will assist high-growth startups to raise funds privately before a public listing.