The SPAC Stars of ’21: Where Are They Now?

joanna coles and bill ackman
Joanna Coles and Bill Ackman. Photo: Noam Galai/WireImage & Matthew Eisman/Getty Images
William D. Cohan
June 8, 2022

When the history of this era of Wall Street is written—and, who knows, maybe I’ll write it myself after my GE book comes out—it may well begin with the onset of the pandemic: Tom Hanks, the scuttled NBA game in Utah, the chaotic weeks between February and March when the Dow Jones Industrial Average dropped some 10,400 points and the Squawk Box team  pleaded through the camera with Warren Buffett to buy something, anything, maybe even the airline industry. And then it will be known, of course, for what happened immediately thereafter: an unprecedented rescue package, and then another, more ZIRP, P.P.P., the S.B.E. and then the acronym that would truly define the era: the SPAC.

What made the SPAC party rock was a confluence of many factors, from low interest rates and an unhealthy desire for risk-taking among the general public, to the perceived chance to invest alongside the rich and famous in a bunch of private, potentially high-flying tech companies. It seemed almost irresistible, no? Who could pass up the opportunity to invest in, say, the next Google or Tesla when they were private companies, like those lucky Silicon Valley venture capitalists? And then you throw in some celebs to boot: A Shaq and Serena Williams here; a Steph Curry and Patrick Mahomes there—why, it was a magnificent bouillabaisse! According to SPAC Insider, an industry publication, during 2020 and 2021, 861 SPAC I.P.O.s were completed, raising nearly $250 billion from investors who bought into the idea that the financial geniuses sponsoring the SPACs would be able to find a private company to merge with, and take public, during the two-year lifespan of the original SPAC. (This is called “de-SPAC-ing” in industry parlance.) 

But now that frenzy is over. Any number of companies have announced that they are abandoning their SPAC mergers, including recently both Forbes and Vice, as well as SeatGeek, which allows customers to buy and sell tickets, that was set to merge with a SPAC affiliated with Billy Beane, the legendary general manager and Michael Lewis protagonist, among others. Several high-profile SPAC deals, such as those for BuzzFeed and WeWork have sputtered as public companies: BuzzFeed now trades at $2.23 a share, down more than 77 percent since it went public via a SPAC merger six months ago. The infamous WeWork now trades at $6.91 a share, down nearly 42 percent in the last year. Remember how WeWork was once said to be worth $47 billion? It now trades at a valuation of $5 billion. Worse, at least 25 SPACs that found a merger partner and closed on a deal during the pandemic boom have issued “going concern” opinions, meaning that their days are possibly numbered as a viable company and will likely need to be restructured or file for bankruptcy. According to SPAC Insider, the market for SPACs has returned to Earth. So far in 2022, just 67 SPAC I.P.O.s have been completed, raising some $11.6 billion. Yawn.