Timing & trends
Special purpose acquisition companies — or “blank check companies” — are suddenly all the rage on Wall Street. What’s the deal?
TL;DR: A SPAC is a publicly traded shell company set up specifically to merge with, and take public, a private company. In the past year, we’ve seen a massive spike in SPACs as an alternative to traditional IPOs, but questions remain about whether they’re a good investment for the public.
What do these 5 people have in common?
- Shaquille O’Neal (7’1” NBA legend)
- Scott Kelly (former astronaut)
- Paul Ryan (ex-congressman)
- Serena Williams (one of history’s greatest tennis stars)
- Bill Ackman (hedge fund billionaire)
Answer: They all have a hand in SPACs (special purpose acquisition companies), one of the hottest financial trends on Wall Street.
In the past 15 months, SPACs have seen a meteoric rise as an alternative way to take a private company public — one that bypasses many of the legal and regulatory “headaches” of the traditional IPO (initial public offering) process.
By the latest tally, SPACs now outnumber traditional IPOs by a factor of 5x.
Many outlets have proclaimed SPACs to be the “new IPO” — and with good reason:
- In 2020, 248 SPACs went public (a 400%+ increase from 2019), collectively raising $83B from investors.
- Just 3 months into 2021, we’ve already surpassed last year’s figures (275+ SPACs, $84B+).
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A typical real estate investment can easily produce a return of 15% – 25% depending on the appreciation and the mortgage pay-down (these are generally the two that recognize the highest returns). There aren’t a lot of investments that can say they generate these kinds of returns, especially with relatively low risk (if done right!).
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Could there be trouble brewing in Elon Musk’s communist paradise?
(Reuters) – The Chinese military banned Tesla cars from entering military housing complexes, citing security concerns over the cameras installed on the vehicles, according to two people who saw notices of the directive.
The order issued by the military advises Tesla owners to park their cars outside of military property, Bloomberg had earlier reported, adding that the ban was notified to residents of military housing this week.
Separately, the Wall Street Journal reported that China’s government was restricting the use of the company’s cars by personnel at military, state-owned enterprises in sensitive industries and key agencies, as they could be a source of national security leaks.
It was not immediately clear whether the measure applied to all such facilities.
Today, Hong Kong-based payment and cryptocurrency platform Crypto.com announced a global partnership with Visa that also includes principal membership in Visa’s network in Australia. The company also plans to roll out fiat lending against bitcoin and other cryptocurrencies as collateral via the Crypto.com Visa Card V -2.9%.
Launched in Singapore in November 2018, the Crypto.com pre-paid Visa Card was one of the first cards tied to bitcoin on the market and is currently the largest Visa program of its kind, with 31 markets covered in Europe, as well as the U.K., Canada, and the U.S., where it launched in July 2019. Users can convert their crypto into one of the supported fiat currencies, such as the U.S. dollar, euro, British pound, and others, pay with their card and make cash withdrawals anywhere Visa is accepted.
With Visa principal membership, Crypto.com will begin direct issuance of the Crypto.com Visa Card in Australia and scale the program to new markets. The company is in the process of shipping cards in Japan and Korea, Latin America, the Middle East, Africa, and Turkey. Its ultimate objective is to make the services available everywhere outside of China. The card program offers up to 8% cashback on purchases with no upper limits, a full rebate on Spotify, Netflix NFLX +1%, and Amazon Prime, and no annual or monthly fees.
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