GameStop Day Traders Are Moving Into SPACs

Link: https://www.wsj.com/articles/gamestop-day-traders-are-moving-into-spacs-11612175401?mod=djemwhatsnews

Excerpt:

Day traders fueling enormous gains in popular stocks such as GameStop Corp. are also powering big swings for another suddenly hot investment: so-called blank-check companies.

Special-purpose acquisition companies—shell companies planning to merge with private firms to take them public—are rising more than 6% on average on their first day of trading in 2021, up from last year’s figure of 1.6%, according to University of Florida finance professor Jay Ritter. Before 2020, trading in SPACs was muted when they made their debut on public markets.

Now, shares of blank-check companies almost always go up. The last 140 SPACs to go public have either logged gains or ended flat on their opening day of trading, per a Dow Jones Market Data analysis of trading in blank-check companies through Thursday. One hundred and seventeen in a row have risen in their first week. The gains tend to continue, on average generating bigger returns going out to a few months.

Author: Amrith Ramkumar

Publication Date: 1 December 2021

Publication Site: Wall Street Journal