Today we cover $MP, $BRPM, $PTRA, and more…
While SPACs may have been relatively easy targets in the past for Short Sellers, investors are fighting back now. Also, more good news for SPACs as deal flow saw a resurgence in Q3 after a slump in Q2 and Regulators & Dealmakers can’t agree with the SPAC listing framework in Hong Kong. Read today’s Dish to find the latest about all things SPACs.
SPACs to Watch Today
MP Materials hit back at short-seller Grizzly Research after it described the company as a ‘low-quality deal that could cost investors dearly.
More specifically, the short seller believes that there is a 60% potential downside in the short to medium term for shareholders. Grizzly claimed that MP Materials has ties to the Chinese Government despite selling itself as the largest rare earth producer in the western world.
Grizzly stated that 99% of the company’s revenues are related party transactions (Related Party is Shenghe), which can be traced back to the Chinese Government and could potentially pose a national security concern.
MP materials hit back at the report, claiming that the facts and analysis of the company were being misrepresented and it was ultimately a distraction.
The situation is expected to unfold over the next few weeks and investors should receive more clarity when the company reports Q3 numbers on November 4th. Despite the report, other analysts remain bullish on MP Materials, with JPMorgan rating the stock at an ‘overweight’ with a price target of $45.
Shares in SPAC B Riley Principal briefly touched $15 before being shorted by a dark pool.
$BRPM, which is set to take FaZe Clan public saw a roller-coaster session, where shares briefly touched $15, before falling 25% to close the session.
One potential reason for the volatility could be the fact that the stock was shorted by a dark pool. $BRPM has a dark pool short volume of 11.7 million and a float of just 17.2 million making it a prime target for a short squeeze.
Looking at the volumes from yesterday, $BRPM stock trading volumes stood at 43.8 million, making it a prime candidate for a short squeeze.
Influencers on TikTok and YouTubers are doing their part to drive interest in the stock and the vast network effects of FaZe clan could potentially result in millions of millennials/gen-z investors jumping on the bandwagon.
SPAC Activity bounced back in Q3, with 75 de-SPAC transactions raising $167 billion in the capital.
The transaction figure also represents the third-highest quarterly total of SPAC offerings in the last five years. The pipeline for SPAC IPOs also remains strong, with 97 new SPAC listings in the quarter.
After a few hurters of frothy market activity, Q4 may mark the start of a new cycle with more reputable SPAC sponsors and higher quality targets taking advantage of the benefits of a de-SPAC process, thereby reinstating confidence in the broader SPAC market.
Under the collaboration, Proterra will supply its H Series battery system technology to Komatsu for the development of battery-electric LHDs, drills, and bolters for underground hard rock mining. The collaboration represents Proterra’s entry into the underground mining equipment market.
Goldman Sachs has initiated coverage on SmartRent, with an ‘Overweight’ rating and a Price Target of $18, implying a potential upside of 50% from current levels. The stock rose 8% on the news and is already up 3.5% pre-market.
SPACs After $DWAC
Corporate Advisors and Investment banking firms are now pushing back against Hong Kong’s SPAC framework, claiming that the rules may be too rigid for the city to be competitive.
Key concerns include a proposal that requires SPAC deals to be worth at least HKUS$1 billion ($130 million), which may result in smaller buyout targets being excluded. Other rules stipulate that a SPAC listing must have at least 75 professional investors, 40% of whom must be institutional, while retail investors are barred from participation until the company carries out its merger.
The proposed guidelines may also delay SPAC mergers by three to six months as Hong Jong requires the merged entity to appoint a financial sponsor to carry out due diligence and meet the exchanges listing requirement.
While the regulations could potentially protect retail investors and improve the quality of deal flow, it also threatens to undermine SPACs by proposing such requirements. Hong Kong regulators want SPAC offerings to be unique and tailor-made for the country, rather than blindly replicating US SPAC rules.
Hong Kong authorities have spent years trying to combat illegal practices linked to the formation and speculative trading of shell companies, which they say provide opportunities for market manipulation and insider dealing. Those concerns resulted in strict rules in 2019 that constrain back door listings.