Finance people: are SPACs never sketchy?
by ravenium (2024-03-26 14:19:00)

In reply to: Truth Social is merging with DWAC.  posted by EricCartman

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To a layman this feels like one of those "that seems like a grift" financial concepts.

It's an easy way to IPO, so kind of shady. *
by EricCartman  (2024-03-26 18:25:45)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Cannot reply

Yep, easier for a crooked management team to go public
by gregmorrissey  (2024-03-26 19:13:30)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Cannot reply

But there are some good management teams getting caught up in the SPAC selloff of the last two years. Some were legitimately overpriced in the exuberance of free money and are trading pretty close to fair value now. Some are undervalued relative to their balance sheets similar to what IAND75 mentioned about his son's company.

Personally, I'm a big fan of Aurora Technology. They are developing an autonomous driver focused on going to market initially with freight transportation. Their leadership and engineering teams are the best you'll find in autonomous driving outside of Waymo. They were ridiculously cheap a year ago. They are only kind of cheap now. If, and a big if, they hit their end of year commercialization target then they'll be trading back at their "IPO" valuation of roughly $10b. Their price won't be at quite their IPO level because of subsequent dilution. Long-term they are a $100b to $1T market cap opportunity --- or $0 --- no in-between. Actually, $0 is an exaggeration. My bet is their floor is pretty close to their current market cap because their team and technology and IP would warrant a $5b offer from UPS, FedEx, Amazon, or one of the semi-truck manufacturers.





Not a finance person, but my son helped take a company
by IAND75  (2024-03-26 15:46:50)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Cannot reply

public via a SPAC. Very legitimate. But highly speculative. Early stage company.

An investment in it when it went public may be a very good one sometime in the future, just like any other early stage company. If you want your money out now it would be a big loss.

Pricing on it is tough because it is based upon their product working technically and being adopted. If so, it could be a huge win. If not, then it could be a bust. But right now their stock price makes no sense. Their market cap is less than 2/3rds of their net liquid cash/investments. Not even considering their total net assets.

Once a company goes public via SPAC they have all the standard disclosure requirements of any public company. Truth Social’s 10-Qs and 8-Qs should be interesting reading going forward.
Interesting
by ravenium  (2024-03-28 17:13:31)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Cannot reply

Is it more of a way to get funding quickly? I've only been in the "traditional" model where we get rounds of VC funding.
It gets to public funding quickly with fewer constraints
by IAND75  (2024-03-28 19:35:40)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Cannot reply

than in a traditional IPO process. But in the end you are still a publicly traded company with all the attendant requirements. And the problems of being publicly traded if you are pre-revenue.