A Special Purpose

Throughout the course of the blog we have talked about many companies that fall under this category, but have never specifically talked about companies with this purpose. Special Purpose Acquisition Companies, also known as SPACs, are companies that raise large amounts of capital, in the tens of millions, and then become publicly traded companies, with the sole purpose to merge with startup companies as they decide to go public and release their product. Companies merge with SPACs so that they can have their foot in the market in the very early stages of their company, so that they can use shareholder value for business operations. An example of this exact situation is VTIQ, the special acquisition company that Nikola merged with to become $NKLA. VTIQ had raised capital for the merger and traded at around $14 before hype came about the merger, where it ran up to $30 before changing to NKLA, and the rest is history. The good thing about SPACs? They usually trade in this range of $10-$20, so you can invest in them and just wait for them to find a merger partner. The money won’t be instant, but if you wait long enough it might just pop off, similar to NKLA. $VACQU is set to be tradeable sometime this week, most likely Tuesday with an IPO of $300 million. Whatever company they merge with, will certainly have plenty of capital to make some production strides fast.

-Darnel Shillingford

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