SPAC Activity Hasn’t Been This Bad in Five Years

The most eye-popping number in the once rapidly expanding SPAC universe: zero.

That’s how much money new SPACs raised in July, according to Dealogic data. That’s right. Nada. Zilch. And it’s the first time this has happened since February, 2017. At their peak in March of last year, they raised $36 billion.

The SPAC King Has No Clothes

Also known as blank check companies, SPACs are shell corporations that take companies public without going through the pesky IPO process. But regulators soured, stock prices tanked, and now even the most high-profile SPAC evangelists are beating a hasty retreat:

• Chamath Palihapitiya, the so-called SPAC King, last week quietly filed to extend the deadline for two of his blank check companies to find a merger partner (if SPACs don’t complete a deal, they have to return the money they raised to investors). The boastful Palihapitiya once compared himself to Warren Buffett, but all four of his SPACs that did complete mergers are trading below their $10 per share starting price. One of them, Virgin Galactic, is down over 25%.
• Managers of over 600 SPACs that together hold $174 billion have deal deadlines in the next 17 months, according to SPAC Research data, but it’s unclear anyone wants in— last month, famous activist investor Bill Ackman’s Pershing Square liquidated the largest blank check firm ever and said it would return $4 billion to shareholders.

Going Pains: According to research firm Audit Analytics, at least 25 companies that merged with SPACs in 2020 or 2021 have issued liquidation warnings in recent months. They’ve gone from blank check companies to firing blanks.