Autumn colors, crisp weather, Grandma’s apple pie, basic outfits paired with pumpkin spice lattes, and varieties of gourds can all be associated with the month of October. Many people look forward to all of those seasonal tangibles, but for individuals tied to the market and seeking some Q4 profits, SPACtober is what warms the insides.
For those of you who don’t know what a SPAC is, it is a Special Purpose Acquisition Company. SPAC’s are companies that have no specific commercial operations and are created primarily to raise capital through IPO’s** for the purpose of acquiring an existing company.
** IPO ~ Initial Public Offering: The process of offering shares of a private corporation to the public in a new stock issuance. This allows a company to raise capital from public investors. This transitions a company from private to public.
Essentially they are a blank check, ready to through some dough to businesses and ideas with the purpose of helping them grow and waiting to reap the benefits, hence the nickname “Blank Check Companies”. SPAC’s are no new concept, they have been around for years. Recently, they have been gaining traction and become more noticeable to the public eye. To show how big SPAC’s truly are, in 2020 alone, there were more than 50 SPAC’s formed in the United States raising nearly $21.5 billion dollars. Big-name underwriters such as Goldman Sachs, Credit Suisse, and Deutsche Bank, as well as renowned senior execs, have been getting involved to invest in shorter-term opportunities with potentially high returns. Although risky, and possibly volatile, SPAC’s are HOT.
So what makes October now SPACtober in finance bro terms? In recent times, investors are looking for quick turnarounds and the ability to flip stocks once a profit occurs. If you are staying active in the finance community, you probably have heard of Nikola ($NKLA), Workhorse ($WKHS), and of course, the bigger ones in Virgin Galactic ($SPCE) and DraftKings ($DKNG), which all went public via SPAC offerings. Here are some recent SPAC’s that have caught my attention after discussing with friends, colleagues, industry experts, and financial research.
SPAC: Forum Merger II
Merger: Tattooed Chef ($TTCF)
On October 16th, Ittella International, a plant-based food company with a broad portfolio of innovative products, and Forum Merger II Corporation, a SPAC, completed their business combination to form Tattooed Chef, Inc. Tattooed Chef’s common stock and warrants will begin trading on Nasdaq under the ticker symbols “TTCF” and “TTCFW”. The Tattooed Chef brand was created to meet the growing demand for great tasting plant-based food.
According to FMCI's website, the company has raised $250 million in capital and has the ability to raise additional capital through the issuance of equity and debt securities. The capital will be used as part of the merger consideration and as growth capital. The stock is currently trading in the low 20's, but analysts believe that in the coming weeks, shares could see $50 post-merger.
SPAC: Diamond Peak Holdings Corp.
Merger: Lordstown Motors ($RIDE)
Lordstown Motors is the latest company to enter the EV world. After watching the General Motor's plant close, they were able to inherit it and have found a purpose for its use. Lordstown will be creating the Lordstown Endurance, a full-size electric pickup truck that’s expected to deliver 75 miles per gallon and intended for the commercial market. The company plans to start production in 2021. At capacity, it will be able to produce 600,000 vehicles a year. It has $1.4 billion of pre-orders.
DPHC raised $780 million in an IPO and through the sale of discounted shares. The full amount will transfer to LMC if the vote passes as expected on October 22nd. This reverse merger would provide startup Lordstown Motors Corp twice as much money as it needs to retool a former General Motors plant to build a commercial fleet-focused electric pickup truck. Many are comparing Lordstown to Nikola in terms of volatility, so invest with caution and background information.
If the first overall draft pick Joe Burrow is partnering up with Lordstown, I am definitely intrigued.
SPAC: Spartan Energy Acquisition Corp
Merger: Fisker Inc. ($FSR)
Fisker Inc. is another company looking to revolutionize the automotive industry. They are developing what is said to be "the most emotionally desirable and eco-friendly electric vehicles on Earth". EV has been a hot commodity this year, and SPAQ wanted to get into the mix. The industry is with no question a "high risk-high reward" opportunity. Spartan and Fisker announced earlier this month that they plan to hold a special meeting to approve the combination between the two companies, which is scheduled for October 28th.
Photo: Green Car Reports
AGAIN, I am NOT a financial advisor and all of my opinions and recommendations are my views alone. Invest at your own risk, with your own research :)