The Boom in blank check companies has turned into a bust. According to the WSJ, many blank check firms or SPACs, are down more 90% or more from their IPO price.
The SPAC boom took hundreds of risky companies to the stock market. The next stop for many is bankruptcy court.
Dozens of companies that merged with SPACs are running out of cash, joining at least 12 that have already gone bankrupt after combining with special-purpose acquisition companies.
More than 100 companies, including electric-scooter firm Bird Global Inc., smart-sock baby-monitor maker Owlet Inc., and electric-car startup Faraday Future Intelligent Electric Inc. are running out of cash, according to a Wall Street Journal analysis of the companies’ cash and cash flow from operations data disclosed in regulatory filings.
Shares of many of these companies trade under $1, more than 90% below where they did when they went public, and are in danger of being delisted. Those that have raised cash typically have done it on onerous terms. Bird extended its runway by merging with its Canadian partner.
Many of these businesses were worth billions when they hit the market and drew in small investors excited at the prospects of space tourism, cryptocurrencies and electric cars. Companies that went public this way have since collectively lost more than $100 billion in market value.
Richard Branson’s Virgin Orbit Holdings Inc. is the latest big name to go bankrupt. The satellite-launch startup was valued above $3 billion and backed by investors including Boeing Co. when it went public at the end of 2021.
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