It’s the magic word of the moment on Wall Street: SPAC. These publicly traded funds raise capital to acquire an unlisted company. The latter therefore becomes listed and, given the current excitement for everything that is introduced on the stock exchange, it is very likely that its price will ignite. By the time investors bring their millions to a PSPC, they don’t know which company will be acquired, or at what valuation. This explains why these structures are also called “blank check companies”. But sometimes things go wrong, as the acquisition of Lucid Motors showed on February 22. The future Tesla bought by a SPAC: what could go wrong?
A classic IPO is based on the audited accounts of the company which aims for a listing. These accounts cover years that actually took place. The company in question does not have the right to make sales or profit projections for the future. A SPAC, yes.