Stable Road (SRAC) Cuts Deal Valuation in Half -- Market Loves It

It may seem counterintuitive at first, but SPAC investors were excited by the cut in SRAC's valuation. Plus, the last four SPAC votes for June: ALUS, HOL, APXT, WPF.
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On Tuesday Stable Road (SRAC) filed an 8-k letting investors know that they have cut the enterprise valuation for Momentus by almost half, from $1.131 billion to $566.6 million, and extended the outside date by a couple months to August 13, 2021. The market is responding very positively with the SPAC rising in after hours trading and again trading up ~9% in premarket. 

While at first blush investors might wonder why SRAC is trading up on the news, but it isn't too counterintuitive. Effectively, because of some of the initial challenges (e.g. NSA, SpaceX partnership, etc.) delaying the potential realized value of the deal, investors are now getting Momentus at "half off" and while the initial valuation may be lower, they will still expect it to realize its full valuation down the road.

Last 4 SPAC Votes for June
With almost 30 de-SPACs happening in June SPAC investors have seen a welcome reduction in outstanding SPACs. While the oversupply is by no means cleared out, it was a positive month in terms of correcting towards a better supply/demand balance.

Today's SPAC Votes:

Jun 30 | $ 10.03 | ALUS - Alussa Energy Acquisition Corp --> FREYR
Jun 30 | $ 13.33 | HOL - Holicity Inc --> Astra
Jun 30 | $ 12.11 | APXT - Apex Technology Acquisition Corporation --> AvePoint, Inc.
Jun 30 | $ 9.94 | WPF - Foley Trasimene Acquisition Corp. --> Alight Solutions

Other SPAC News:

  • Virtuoso Acquisition Corp (VOSO) / Wejo increased their PIPE to $125m and are brining in Microsoft as one of the new PIPE investors. The PIPE already included General Motors and Palantir Technologies. VOSO closed at $9.91, but is up almost 1% in premarket bringing it back to $10.
  • Climate Change Crisis Real Impact I Acquisition Corporation (CLII) approved its merger with EVgo on Tuesday, with just $130k in redemptions. Unsurprising given CLII closed at $15.36 (though that was down ~7% on the day)
  • Cerevel Therapeutics (CERE) had a huge day today following positive trial results for Phase 1b of its Schizophrenia drug. Shares more than doubled +136% to $29.69. 

Today's SPAC IPOs

Three more SPAC IPO's today in addition to Chamath's new series also pricing. It certainly does feel more like early in the year as most IPOs are trading around NAV. Elliott's debut as a SPAC sponsor was solid with Elliott Opportunity II (EOCW / U) trading up slightly after pricing its new SPAC IPO yesterday, which was upsized to $530M from $500M. If this one dips below NAV, don't expect it to stay there long as investors will snap it up quickly at a bargain price.

An exception to that is Tuesday's debut of Gobi Acquisition (GOBI) which closed down to $9.91. GOBI is a $250M SPAC with a broad target set. Overall, the market would likely prefer to see even slower IPOs at the moment to further clear out the market, but given the market's reaction to current pacing it isn't yet causing more imbalance.

Chamath's Latest SPACs

In Chamath Palihapitiya's latest SPAC empire building move, his four new new biotech  focused SPACs from Social Capital and Suvretta start trading today. Expect these to do well with the retail crowd given Chamath's improved standing after successfully navigating a rough patch of SPAC-related results over the last few months.

DNAA - Social Capital Suvretta Holdings Corp. I targeting Neurology
DNAB - Social Capital Suvretta Holdings Corp. II targeting Oncology
DNAC - Social Capital Suvretta Holdings Corp. III targeting Organ-related
DNAD - Social Capital Suvretta Holdings Corp. IV targeting Immunology

Tuesday's SPAC Movers

Biggest Gains

HOL jumped the most a day ahead of its merger vote while its sponsor urged shareholders to vote.

15.91% ~ $ 13.33 | HOL - Holicity Inc (Announced)
8.16% ~ $ 22.54 | RSVA - Rodgers Silicon Valley Acquisition Corp (Announced)
6.56% ~ $ 14.29 | LACQ - Leisure Acquisition Corp. (Announced)
4.87% ~ $ 13.34 | SRAC - Stable Road Acquisition Corp. (Announced)
4.05% ~ $ 10.03 | ALUS - Alussa Energy Acquisition Corp (Announced)
3.54% ~ $ 10.54 | IACA - ION Acquisition Corp 1 Ltd (Announced)
3.27% ~ $ 12.96 | TPGY - TPG Pace Beneficial Finance Corp (Announced)
3.05% ~ $ 12.18 | MUDS - Mudrick Capital Acquisition Corporation II (Announced)
2.94% ~ $ 10.50 | GSAH - GS Acquisition Holdings Corp II (Announced)
2.85% ~ $ 12.65 | FWAA - Fifth Wall Acquisition Corp. I (Announced)
2.58% ~ $ 13.92 | THCB - Tuscan Holdings Corp. (Announced)
2.33% ~ $ 17.55 | RICE - Rice Acquisition Corp. (Announced)
2.11% ~ $ 10.05 | GTPB - GORES TECHNOLOGY PARTNERS II, INC. (Pre-Deal)
2.04% ~ $ 10.00 | ISOS - Isos Acquisition Corp. (Pre-Deal)
1.76% ~ $ 9.85 | FRON - Frontier Acquisition Corp. (Pre-Deal)
1.60% ~ $ 10.15 | CCV - Churchill Capital Corp V (Pre-Deal)
1.18% ~ $ 9.89 | EUCR - Eucrates Biomedical Acquisition Corp (Pre-Deal)
1.13% ~ $ 9.99 | FSII - FS Development Corp. II (Announced)
1.03% ~ $ 9.80 | SCOB - ScION Tech Growth II (Pre-Deal)
1.03% ~ $ 9.81 | CFV - CF Acquisition Corp. V (Pre-Deal)

Biggest Losers

-7.58% ~ $ 8.66 | AACQ - Artius Acquisition Inc. (Announced)
-6.91% ~ $ 15.36 | CLII - Climate Change Crisis Real Impact I Acquisition Corp (Announced)
-4.05% ~ $ 15.87 | PSAC - Property Solutions Acquisition Corp (Announced)
-2.99% ~ $ 9.65 | TUGC - TradeUP Global Corp (Pre-Deal)
-2.82% ~ $ 9.66 | NBST - Newbury Street Acquisition Corporation (Pre-Deal)
-2.53% ~ $ 10.00 | FCAC - Falcon Capital Acquisition Corp (Announced)
-2.52% ~ $ 26.32 | CCIV - Churchill Capital Corp IV (Announced)
-2.18% ~ $ 12.11 | APXT - Apex Technology Acquisition Corporation (Announced)
-2.02% ~ $ 10.18 | GRSV - GORES HOLDINGS V, INC. (Announced)
-1.95% ~ $ 12.58 | CMII - CM Life Sciences II Inc. (Announced)
-1.81% ~ $ 9.75 | SPKB - Silver Spike Acquisition Corp II (Pre-Deal)
-1.63% ~ $ 9.68 | VLAT - Valor Latitude Acquisition Corp. (Pre-Deal)
-1.61% ~ $ 11.01 | BCTG - BCTG Acquisition Corp. (Announced)
-1.34% ~ $ 10.34 | DCRB - Decarbonization Plus Acquisition Corp (Announced)
-1.32% ~ $ 17.92 | SSPK - Silver Spike Acquisition Corp. (Announced)
-1.32% ~ $ 10.50 | LEAP - Ribbit LEAP Ltd (Pre-Deal)
-1.26% ~ $ 9.70 | IBER - Ibere Pharmaceuticals (Pre-Deal)

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report.)