Two years ago, a special purpose acquisition vehicle ("SPAC") spearheaded by investor Chamath Palihapitiya made public Virgin Galactic. It was the first spaceflight company to trade on NYSE or any other exchange. The shares traded higher and higher for months, almost instantly launching the SPAC frenzy.
According to SPAC Research data, SPACs have raised $87.9 trillion in the first three months alone. This is more than the total 2020 issuance. According to SPAC Insider, so far, 450 blank check businesses have been formed, compared to 15 only ten years ago.
Palihapitiya is one of the most prominent beneficiaries of this craze. He is known as the Pied Piper of SPACs and Bloomberg's King of SPACs. He has founded at least 10 blank check companies, and plans to publicly share many more. Palihapitiya revealed last year that he had reserved symbols from IPOA on the NYSE to IPOZ on his podcast, All-In Podcast.
Retail investors can get beaten up when market activity becomes too frenzied. After a few companies that were taken public by blank check companies were found to have falsified some of their numbers, Lordstown Motors acknowledged that it didn't have binding orders from customers for the electric Endurance pickup truck. This was after fears grew that SPACs don't have enough disclosures and that they only benefit those who organize them. Palihapitiya joined us last week to discuss this concern.
