What’s happening: Former San Francisco 49ers defender Colin Kaepernick is among the most recent to enter the trend, in which investors give “blank checks” to companies hunting for takeover targets.
Kaepernick will serve as co-president of Mission Advancement Corp., which seeks to raise approximately $ 250 million to invest in socially conscious consumer brands.
“We believe that a company’s clarity around its values can transform a business and mobilize a movement around social causes that benefit all stakeholders,” the company said in a regulatory document published on Tuesday.
Panorama: blank check companies like Kaepernick’s emerged left and right last year as investors – full of cash and looking for returns thanks to the central bank’s loose policies – are looking for more creative places to park their money.
Enthusiasm only increased in 2021. According to Goldman, SPACs raised $ 16 billion during the first three weeks of 2021 – and a series of new records since then indicates that the pace is not slowing down.
Former New York Yankees star Alex Rodriguez is trying to raise about $ 500 million for his SPAC, Slam Corp, according to documents filed with the Securities and Exchange Commission last week. On Tuesday, Rocket Internet co-founder Oliver Samwer said his SPAC would raise $ 250 million for business outside the United States.
Some SPACs have already identified acquisition targets. Many are in the transport sector. Wheels Up announced last week that it would go public by merging with SPAC in a deal that values the private aviation company at $ 2.1 billion. Hyzon Motors, which makes hydrogen-powered trucks, buses and coaches, announced its debut in the public market through a SPAC merger on Tuesday.
But analysts fear that there are now too many people trying to find a limited number of solid investment opportunities. In late January, Goldman warned that there were about 265 SPACs with $ 82 billion to explode in search of acquisitions.
This is causing concern among market watchers for signs that sentiment is getting out of hand.
“In our conversations with the portfolio manager, the boom in SPAC issuance has often been cited as an example of exuberant investor behavior,” David Kostin, chief stock strategist for Goldman Sachs in the United States, recently told clients.
Kostin acknowledges that SPACs have a “low opportunity cost” with American interest rates close to zero. But the space is undoubtedly getting more crowded by the day, as hedge fund managers, technology bosses and athletes throw their hats into the ring.
Twitter’s election policies cost users
Twitter’s efforts to deal with misleading content surrounding the United States elections have hurt the platform’s business, reports my CNN business colleague Kaya Yurieff.
The company said on Tuesday that it had 192 million users who could view ads on the platform at the end of last year, a 27% increase from the previous year, but below what Wall Street analysts had expected.
Remember: before November, the company introduced a series of changes to its product in an effort to contain misinformation.
Twitter acknowledged that some of the changes were “very effective”, while others were “less effective and, as a result, were discontinued”.
That said, the platform continued to add users even after banning former President Donald Trump last month, bolstering Wall Street’s confidence.
CEO Jack Dorsey emphasized on Tuesday that Twitter “is obviously much bigger than any topic or account”, adding that 80% of its audience is outside the United States.
Investor’s view: shares rose almost 7% in pre-market trading and rose almost 67% in the last 12 months. User growth may slow in the coming quarters, however, as the increase related to the pandemic decreases.
GameStop shares return to Earth
The most recent: GameStop shares plunged 16% on Tuesday to $ 50.31. It is now 90% below the $ 483 record set on January 28.
In the meantime, attention is turning to regulators, who are trying to determine what can be done, if anything. Treasury Secretary Janet Yellen has been meeting with federal officials to review what has happened and to ensure that “recent activities are consistent with investor protection and fair and efficient markets”.
“A handful of large companies now carry out most of the trading on the financial markets. So-called market makers can process trades more efficiently over a narrower price range. Among those who benefit?
It is a problem that may arise during a virtual hearing convened by the Chamber’s Financial Services Committee, scheduled for next week. Congresswoman Maxine Waters, who chairs the committee, has not yet announced whether the witnesses will appear, but Politico reports that Tenev must testify.
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Also today: US inflation data is published in January at 8:30 am Eastern time, while lawmakers debate whether another round of stimulus could boost prices.
Tomorrow: markets in China close because of the Lunar New Year holiday.