It’s been just about a month since the issuance of new special purpose acquisition companies, or SPACs, broke the all-time annual record and passed $83 billion. Since then the market has slowed a bit. Compound Capital Advisors CEO and bubble hunter extraordinaire Charlie Bilello noted yesterday that we’ve just hit $100 billion of new SPACs in 2021.
One reason for the slight slowdown, no doubt, is the slumping performance of all the zillions of SPACs already out there. The share price of the Defiance Next Gen SPAC Derived ETF peaked at $34.87 back in mid February. It has since slumped 27% to $25.37 even as the overall stock market has been hitting record highs. And the OG of SPAC merger companies, we’ll-send-a-tourist-into-space-real-soon-now rocket startup Virgin Galactic, is off 61% from its mid-February high.
Speaking of bubble hunters, Nathan Anderson of Hindenburg Research has been pointing out–and betting against–some of the most egregious SPAC stocks inflating in the current bubble. You’ll recall Anderson was the one who uncovered Nikola rolling its electric truck downhill. That sparked an SEC investigation, the departure of the founder, and about a two-thirds drop in Nikola’s stock price. Next Anderson hit SPAC health insurance tech play Clover Health, though he didn’t short the stock.
As part of Fortune‘s newly published quarterly investment guide, my colleague and Rome-based amateur shutterbug Bernhard Warner spoke to Anderson about his latest bubble targets. Still in the mix along with crypto currencies (“It’s just a real Animal House“) and some concerning Chinese fly-by-night tech companies (“They just raise money and essentially misappropriate it without consequence”), Anderson is still sounding the alarm about SPACs. “If there ever was a good SPAC deal, it was probably about 300 SPACs ago,” Anderson says. Then he elaborates:
“You have these companies that are coming public at these gargantuan valuations. And insiders and promoters are ejecting pretty quickly and leaving the retail investor base saddled with the remaining shares, and whatever’s left of the hope of actually following through on these wild projections. It’s just over and over and over again a disappointment to a lot of the investors who actually hang on for any reasonable period of time. It doesn’t take long for a bad SPAC to implode—usually six to 12 months.”
If that’s the case this time around, it’s lining up to be a very messy summer.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com
After months and months of staying put, people are itching to travel. According to recent Google Trends, searches in the U.S. for “Resort” and “Hotel” are at five and 10-year highs, respectively. On today’s Brainstorm podcast episode, Michal Lev-Ram and Brian O’Keefe examine how technology can help us start moving safely again, with the COVID-19 pandemic still upon us. Chief among the technologies to help life resume as safely as possible is the digital vaccine credential, or “vaccine passport,” which you can carry on your phone or a piece of paper. Listen to the podcast here.
NEWSWORTHY
Gentleman, start your wallets. Moving slowly into the future, Mercedes unveiled a more serious Tesla challenger on Thursday. Dubbed the EQS, the electric-powered sedan is said to have a range of 478 miles though no info about pricing yet. Hopefully it will sell better than the dreadful Mercedes EQC from 2019. In other EV news, Walmart, which has been testing self-driving electric delivery vehicles from six different companies, decided to put a big bet down on just one: GM's Cruise. Walmart joined Cruise's latest $2.75 billion fundraising round and bought an undisclosed stake. Trying to keep pace, EV truck maker TuSimple sold $1.4 billion of shares in a TuIPO debut on the TuNasdaq. It wasn't a SPAC merger but it could have been as the company had revenue of under $2 million last year and says it won't actually, you know, be TuSelling any trucks for three more years. The startup's TuValuation is now around $8 billion, far violating the Pressman "never, ever buy an IPO at 100 times sales or higher" rule.
Tip my hat to the new STONKitution. With GameStop trying ever so hard to justify its $10 billion plus market value, CEO George Sherman is not measuring up. The company plans to replace the boss and Sherman will forfeit almost 600,000 shares of stock worth over $90 million. Still, he leaves with almost 2 million shares worth $300 million at today's price. I'm no Wall Street expert, but George, you should sell, sell, SELL! Speaking of bad investing advice, the folks over at Reddit's WallStreetBets are feeling left out of crypto mania. They announced Thursday that discussion of Bitcoin, Ether and Dogecoin will no longer be banned. “I don’t see the point in delaying the inevitable anymore as crypto is here to stay,” moderator “bawse1” wrote. Meanwhile, the bloom may be off another part of the tech boom. Hyped mobile gaming developer AppLovin dropped after debuting on Thursday. Its new shares closed at $65.20, down 19% from the $80 IPO price.
Waiting to expel. The Biden administration has a somewhat different view of Russia than the prior occupants of the White House. On Thursday, Biden slapped Russia with new sanctions over the SolarWinds hack, blacklisting six technology companies and dozens of individuals (including Konstantin Kilimnik, former employee of Trump campaign chairman Paul Manafort) and expelling 10 people from the Russian embassy in Washington, D.C.
Don't keep your feelings bottled up. While we're on the topic of changing administrations, Amazon CEO Jeff Bezos issued his final shareholder letter before handing the reins to Andy Jassy in the third quarter. Bezos was uncharacteristically precise in some of his revelations, disclosing that Amazon has more than 200 million Prime members and more than 100 million Alexa-equipped devices are in the field. Using some back-of-the-envelope math, Bezos calculated that in addition to its $21 billion of profit last year, Amazon generated $280 billion of gains for customers, sellers, and employees. He also pledged to do better by employees after the recent controversies and failed union vote. "We need to do a better job for our employees," Bezos wrote in the letter. "While the voting results were lopsided and our direct relationship with employees is strong, it’s clear to me that we need a better vision for how we create value for employees – a vision for their success."
You can fool some of the people all of the time. An Australian court ruled that Google misrepresented the amount of data collections from some Android settings. In an oddly worded decision, Justice Thomas Thawley wrote that "Google's conduct would not have misled all reasonable users...but Google's conduct misled or was likely to mislead some reasonable users." Google denied the charge and said it might appeal the decision.
FOOD FOR THOUGHT
Something a little more useful than usual is today's food for thought. David Smith is the iOS app developer behind several brilliant programs for the Apple Watch including Widgetsmith and Sleep++. But his latest creation, Ian's Awesome Counter, is something different. Smith's son, Ian, has difficulties managing his attention, a not uncommon challenge these days. The new app, which is available for free, quizzes the wearer at a regular interval about whether they are on track and records the result in a daily graph.
My son, Ian, can sometimes have difficulty with regulation and management of his attention. We’ve tried several different strategies for helping him with this. One of the strategies that we found most successful was giving him regular prompts throughout the day and asking whether he thought he was on task and staying focused. This increases personal awareness and gives us a scaffolding against which we can measure progress...This app is provided completely free of charge. I’ve found it really helpful for my family and my hope is that by sharing it, other families will reap similar benefits from it. While it was designed out of a desire to help a child with their attention management, it could just as easily be used to help an adult stay on task.
FOR YOUR WEEKEND READING PLEASURE
A few great long reads I came across this week:
There’s Nothing to Do Except Gamble (New York Magazine)
Welcome to the non-fungible, memeified, cryptodenominated, degenerate future of finance.
The Mysterious Influencer Stock Market Worth $1 Billion (Intelligencer)
When BitClout arrived on the internet last month, it befuddled much of the cryptocurrency world. That was not least because the company, which describes itself as “not a company,” but a “new type of social network” — a sort of bitcoin-meets-Twitter — had ripped off some 15,000 profiles of famous people and influencers from actual Twitter and opened accounts in their names without their permission.
Tony Chocolonely’s quest to prove that ethical chocolate and sweet profits can co-exist (Fortune)
in 2005, the journalist, Teun van de Keuken, cofounded one of the world’s most maverick chocolate companies, Tony’s Chocolonely, a mashup of his first name and the lonely battle against Big Chocolate, as the handful of multinationals that dominate the industry is known. The mission was clear. At a time before “ethical chocolate” was even a phrase, Tony’s aimed to prove that companies could create fine chocolate without an army of child workers.
Moneyball With Money: How Billy Beane and Brian Cashman Became Friends, Won Games, and Influenced People (The Ringer)
With polar-opposite payrolls, the Athletics’ Billy Beane and the Yankees’ Brian Cashman have helped reinvent baseball and defied the short shelf life of MLB GMs. And their historic careers and close friendship began with one 1997 trade. The two executives and people close to them reflect on their legacies, longevity, and what has and hasn’t changed since that first transaction.
IN CASE YOU MISSED IT
Robots are now scanning shelves at Save Mart and Lucky Supermarkets in California By Jonathan Vanian
Why you can expect Coinbase to have a very hard time justifying its $61 billion market cap By Shawn Tully
These analysts make the ‘bull’ case for Coinbase’s stock By Anne Sraders
How to invest for the 22nd century By Rey Mashayekhi
10 stocks star fund manager Cathie Wood is buying for 2021—and 3 she’s avoiding By Anne Sraders
The pandemic is hurting female scientists—that’s bad news for all of us By Kristen Bellstrom and Emma Hinchliffe
How mRNA vaccines like Moderna’s and Pfizer’s are propelling us into the ‘new golden age’ of vaccinology By Kat Eschner
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
It's a snowy (!) Friday in Boston and breakups are in the air. JRod is no more. There's a fictional breakup story on the way too (hat tip to blogger Jason Kottke). Casimir Nozkowski’s new movie The Outside Story about a heartbroken New Yorker is coming out on April 30 but the 2-minute trailer is practically a romantic comedy all on its own. Have a good weekend (and stay away from those water balloons).
