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No slowdown in sight for IPOs or SPACs

February 19, 2021. Summarized by summa-bot.

Compression ratio: 22.7%. 1 min read.

Mandatory Credit: Photo by Erik Pendzich/Shutterstock (11762568q) People walk by the New York Stock Exchange (NYSE) in the Financial District in Manhattan in New York City. Daily life, New York, USA - 16 Feb 2021

The market for new stocks continues to sizzle — with no signs of a slowdown for initial public offerings or special purpose acquisition company mergers.

Investors continue to show interest in companies using blank check mergers with special purpose acquisition companies, or SPACs, to go public.

Sustainable indoor farming company AppHarvest and sexual health and wellness firm Hims & Hers debuted this year via SPAC deals.

And rumors are rampant that electric car company Lucid Motors will soon go public via a merger with a SPAC named Churchill Capital Corp IV.

"The main driver of this resurgence is the strength of the equity market overall," said Patrick Galley, CEO of RiverNorth Capital Management, an investment firm that runs a fund focusing on SPACs. Galley added that as long as existing SPACs perform well, companies looking to go public though a blank check deal will continue to command higher valuations.

WeWork, which scrapped plans to go public in a 2019 IPO following questions about its valuation and corporate governance practices, is reportedly looking at going public via a SPAC, according to The Wall Street Journal — a sure sign of froth in the market.

Morgan Creek recently launched an exchange-traded fund focusing on companies that went public through SPACs. The ETF is actively picking which stocks to own as opposed to relying on a passive index.

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