SPACs Are in a Bubble, but These 3 Stocks Will Make It Through
It’s been an incredible year for special purpose acquisition companies, or SPACs, which in 2020 have become a preferred vehicle for early-stage companies wanting access to public markets.
A SPAC, also known as a blank-check company, is a shell that goes public and then merges with an existing business. The alternative to a more traditional initial public offering has been used by a range of companies this year including DraftKings and Nikola.
Investors were initially enamored, with shares of DraftKings and Nikola both more than doubling after their SPAC mergers closed. But recent issues at Nikola have tempered the enthusiasm for these stocks, and reminded investors of the risks that can be associated with young companies.