Shares of SPACs and firms they have taken public are tumbling, punishing individual investors who piled into the once-hot sector, The Wall Street Journal reports.
The Defiance Next Gen SPAC Derived Exchange-Traded Fund, which tracks companies that have gone public through SPACs along with SPACs that have yet to do any deals, has fallen about 30 percent in the past three months and recently hit a six-month low. Popular firms tied to the sector such as electric-car-battery company QuantumScape Corp. and space-tourism firm Virgin Galactic Holdings Inc. are down 50 percent or more during that span. SPACs listing splashy firms such as electric-car startup Lucid Motors and personal-finance company Social Finance are also taking a beating.
The reversal highlights the risks that come with popular speculative trades. It is occurring as investors retreat from technology stocks amid fears that rising inflation will force the Federal Reserve to end its easy-money policies more quickly than anticipated. Read more.
