According to SPAC Research, SPACs are on the rise. In 2013, there were 10 SPACs with approximately $144.7 million in assets. More recent data shows that nearly 200 SPACs went public in 2020, raising more than $70 billion , almost matching the performance of IPOs in 2020. Consider the following examples:
In September, real estate technology company Opendoor (OPEN) announced its intention to go public through a merger with Social Capital Hedosophia II, a SPAC managed by Chamath Palihapitiya. It became a public company and debuted on the market in December. Opendoor raised about $1 billion in cash from the transaction.
Richard Branson's Virgin Galactic (SPCE) merged with Palihapitiya's spain mobile database SPAC in late 2019, taking the company public and giving it a $2.3 billion market cap. Virgin Galactic shares are up 45% since the listing.
Nikola (NKLA) was one of the first high-profile electric vehicle companies to go public via a SPAC. It merged with VectoIQ Acquisition Corp, which is backed by ValueAct and Fidelity. The merger boosted the company’s valuation to nearly $28.8 billion, despite the revenue shortfall.
DraftKings (DKNG) was founded as a fantasy sports company in 2011. It merged with Diamond Eagle Acquisition Corp, giving the sports betting company a valuation of $2.7 billion. The company went public in April with an initial share price of $17, which rose to $52.11 a few months later.
A new type of SPAC
Bill Ackman, the hedge fund activist at Pershing Square, launched a unique $4 billion SPAC in July 2020. The price per share was $20, up from the usual $10 — but his gain was 0%. In one fell swoop, it eliminated the risk of shareholder dilution, while also removing the founders’ incentive to get the deal done before the deadline.