SPAC Deal Pressure Building

Expect slow SPAC deal flow through May, but then get ready as deal pressure builds massively with "peak SPAC" IPOs aging quickly and facing fierce competition.
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It was another quiet SPAC Monday yesterday and SPAC investors are still waiting for positive news to trigger some excitement. The CCIV / Luicd surge (up +16% on Apple rumors) is a sideshow to the type of big tent event(s) that will be needed to re-ignite enthusiasm.

Investors will also not like seeing announced deals continue to have the air slowly leak out post deal announcements. CM Life Sciences II (CMII - SomaLogic), BowX Acquisition (BOWX - WeWork), Property Solutions (PSAC - Faraday Future), and BCTG Acquisition (BCTG - Tango Therapeutics) all dropped -4.5%, -4%, -2%, -2% respectively. 

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For those SPAC investors getting bored by the lack of activity, you should expect another month or two of idle flow, but then get ready. Given the current headwinds in the market for SPAC activity (i.e. SEC, market sentiment) the next month or two will continue apace, but the deal pressure will be steadily building as the glut of SPACs that went IPO'd during peak SPAC times -- December through March -- age. Any SPAC that IPO'd during this period will already be feeling the pressure themselves as the competition for great private companies may leave lower-tier SPACs feeling like they are fighting for table scraps.

SPACs that IPO'd during "Peak SPAC" will be under the deal gun in just a few months

SPACs that IPO'd during "Peak SPAC" will be under the deal gun in just a few months

SPACs will be competing with direct listings (e.g. Coinbase  (COIN) ), private equity (e.g. Thoma Bravo's acquisition of ProofPoint), and the over 400 other SPACs! 

Over the course of the next month or two we expect deal valuations to continue to temper, but when "peak SPAC deal" hits, SPAC investors could see valuations tilt heavily in favor of the target companies as competition will be fierce. Investors should also watch closely both for (a) what the overall deal terms are and (b) which sponsors are doing the deal. This will be the period where SPAC reputations are made -- both good and bad -- and those sponsors that prove their mettle will be the long-term SPAC winners.

One last thought, investors should watch deal votes very closely over the next month as all SPACs seem to be scrambling for votes. Starpeak (STPK) shareholders vote today on their combination with STEM. This has been one of the standouts of the SPAC world to date and ended yesterday with its common trading at $26. The expectation is that this should pass and don't expect to see many redemptions, so anything there would be worth noting as other SPACs aren't trading nearly as well. 

SPAC Stock Ideas

Biggest SPAC Discounts
-3.40% ~ $ 9.66 | IBER - Ibere Pharmaceuticals (Pre-Deal)
-3.30% ~ $ 9.67 | ASPC - Alpha Capital Acquisition Company (Pre-Deal)
-3.30% ~ $ 9.67 | KAII - Kismet Acquisition Two Corp. (Pre-Deal)
-3.20% ~ $ 9.68 | AGAC - African Gold Acquisition Corporation (Pre-Deal)
-3.20% ~ $ 9.68 | DHHC - DiamondHead Holdings Corp. (Pre-Deal)
-3.10% ~ $ 9.69 | PPGH - Poema Global Holdings Corp. (Pre-Deal)
-3.00% ~ $ 9.70 | ISOS - Isos Acquisition Corp. (Pre-Deal)
-3.00% ~ $ 9.70 | VOSO - Virtuoso Acquisition Corp. (Pre-Deal)
-3.00% ~ $ 9.70 | SPTK - SportsTek Acquisition Corp. (Pre-Deal)
-3.00% ~ $ 9.70 | ADEX - ADIT EDTECH ACQUISITION CORP. (Pre-Deal)
-3.00% ~ $ 9.70 | HCCC - Healthcare Capital Corp. (Pre-Deal)
-2.92% ~ $ 9.71 | ITQ - Itiquira Acquisition Corp. (Pre-Deal)
-2.90% ~ $ 9.71 | CHAA - Catcha Investment Corp (Pre-Deal)
-2.90% ~ $ 9.71 | BRPM - B. Riley Principal 150 Merger Corp. (Pre-Deal)
-2.90% ~ $ 9.71 | COVA - Crescent Cove Acquisition Corp. (Pre-Deal)

Yesterday's Biggest SPAC Decliners
-4.50% ~ $ 13.21 | CMII - CM Life Sciences II Inc. (Announced)
-4.02% ~ $ 11.45 | BOWX - BowX Acquisition Corp (Announced)
-2.79% ~ $ 9.75 | RMGC - RMG Acquisition Corp. III (Pre-Deal)
-2.08% ~ $ 9.75 | DDMX - DD3 Acquisition Corp. II (Pre-Deal)
-2.04% ~ $ 12.02 | PSAC - Property Solutions Acquisition Corp (Announced)
-2.02% ~ $ 11.17 | BCTG - BCTG Acquisition Corp. (Announced)
-1.90% ~ $ 9.82 | ACII - Atlas Crest Investment Corp. II (Pre-Deal)
-1.80% ~ $ 9.82 | ENNV - ECP Environmental Growth Opportunities Corp. (Pre-Deal)
-1.70% ~ $ 9.84 | XPDI - Power & Digital Infrastructure Acquisition Corp. (Pre-Deal)
-1.49% ~ $ 10.02 | LSAQ - LIFE SCI ACQ II (Pre-Deal)

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