Out of 199 companies that used a SPAC to go public in 2021, only 11% now trade above their offering price, meaning that investors who have held on to the stocks have been left with huge losses, Fortune reports. On average, SPAC shares have lost 43%.
Wall Street fell in love with SPACs during the pandemic owing to the speed of the procedure and the lack of disclosure requirements that are typical of the more rigorous IPO process. Some 400 companies added their tickers to U.S. stock exchanges in 2021 alone, and roughly half of those were SPACs.
The problem is that SPACs have underperformed, leaving retail investors holding the bag. Top deSPACed companies like Virgin Galactic Holdings and DraftKings have dropped 84% and 78%, respectively, from their 2021 highs. Read more.
