United Airlines orders electric vertical aircraft, invests in urban air mobility SPAC
Interested in your thoughts!
I feel 4 passengers per vehicle wont cut it and fear that the adressable market for to-airport-transport is too optimistic. But thats just my take…
Even after googling and investopedia I am not sure what the up and downsides of SPACS are. Would really appreciate if someone with good understanding could explain in (laymans terms)!
Cheers!
Some points:
Advantages of SPAC to company:
-Less scrutiny.
-Greater Public Relations, they are more in the spotlight / in the news.
-Less “hassle” and potentially cheaper
Some of the disadvantages:
-They give a percentage of the shares to the SPAC sponsor/organiser for free…
Risks of investing through a SPAC for the investor:
-Less scrutiny, less accounts and information published than in an IPO
-Before the company is announced you don’t now what you are buying, you are mainly buying based on the sponsor and the plan for what they are aiming for. Not the case of this one as they already have a target and I guess that they have reached a deal.
I see, ty @EquityInvestor
The SPAC sponsor/organizer would be then the merging other company?
Are SPACS eventually going to be “normal” public companies traded on the market or do they remain target of less scrutiny (as long as they wish)?
The whole SPAC merges. It is just that usually the sponsor gets 10-20% of the SPAC shares for free, which if for example the SPAC is initially 10% of the company results in 1-2% owership of the merged company. An exception to this is the PSTH SPAC, and I guess there may be others. I thin Ribbit LEAP may be also…
Yes, a SPAC is a normal company from merger onwards. Its just that the data of the target company prior to the merger is not that readily available and less information is published.
For example, for a company that came out to the market via a SPAC in 2015 you will now have 5 years of market-level data (which is meant to be auditted and more trustworthy, at least in developed markets), whereas when the SPAC merged with the target company in 2015 investors would have had limited information. Limited information compared to those companies that IPO-ed (the normal route) or Direct Listed in 2015.