Alert

LEARN HOW TO SET UP AND MANAGE A PORTFOLIO IN 4 EASY STEPS WITH DR. JIM SCHULTZ!

SPACtacular

Feb 26, 2021

By: Dylan Ratigan

Dylan’s Weekly Notes:

IPOs. Private equity. SPACs. Raising capital allows companies with an attractive product or service to obtain funding. They can do a traditional IPO, casting bait at roadshows with different narratives to prospective investors until they catch a bite. But the fish in the lake are limited by investment banks. Private equity raises require a bit of selling your soul and unfavorable conditions. Then there are SPACs.

SPACs aren’t new. But they’re newly en vogue. For companies, they offer a fast and easier path to capital. For SPAC participants, it’s an opportunity to get in on the ground floor. It’s quick. It’s efficient. 

For the retail investor, IPOs are the elusive pot at the end of the rainbow. Initial placements are done with institutions, not Joe Blow. Joe also doesn’t have access to private equity firms because most Joes aren’t accredited investors. But buying shares in a SPAC gives the illusion of getting in early. 

Forget about the fact that there’s an inherent premium priced into a SPAC. Forget that most SPACs are priced at $10 because this one goes to eleven. Forget that some SPACs don’t even have an acquisition target in mind when they begin trading publicly. Just buy it because it’s going to go higher, right?

Our capital markets are the most efficient on the planet. Companies with the best ideas bubble to the top and get the funding they need. Goldman Sachs will take you public, provided they can make money for themselves. If Goldman passes, private equity is lurking out there willing to take your first born in exchange for a lot of zeros. 

But if you want to skip the pomp and circumstance, there’s the SPAC. The metaphorical equivalent of a furnished home waiting for a family. Whether that family will make for good neighbors or increase property values doesn’t matter. What matters is you, me and grandma can buy a piece of the house in advance. Knowing what we’re buying isn’t as important as being able to buy. And maybe, just maybe, we’ll get lucky and make a few bucks. A win for the company and a win for retail traders. Wouldn’t that be spac-tacular?

Be sure to catch Dylan Ratigan & Tom Sosnoff every Wednesday at 1pm CT for a new episode of Truth or Skepticism live on tastytrade.com.

Listen to previous episodes on Spotify, Apple Podcasts or on tastytrade.com.


Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”). tastytrade is a trademark/servicemark owned by tastytrade.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.

© copyright 2013 – 2021 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on tastytrade.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.