Experts agree on IPO market things are getting hot but one segment is left out: special purpose acquisition companies SPACs, which are publicly traded shell companies with a mandate to acquire a private company. SPACs provide something of a backdoor to public markets and, although they were very popular in 2021, the model is now withering as SPACs only accounted for 6.3% of public markets. $8.4 billion raised through IPOs in the first quarter of 2024. Quarterly review of the first quarter of 2024 also shows that SPACs during this period averaged a dismal -49% return.
One company undeterred by these numbers is Mission Space Acquisition Corp., which filed its S-1 Thursday with the Securities and Exchange Commission. The company, a subsidiary of Delaware-based Mission Space Sponsor, plans to list shares on the NYSE as a blank check in an effort to merge with a company in a field related to aerospace and defense.
“Over the past decade, there has been a steady increase in demand for space services and applications, both for the private sector and for various government agencies,” says the S-1, which indicates that the company will negotiate under the stock symbol. MISNU.
Mission Space Acquisition, a company incorporated in the Cayman Islands, is putting 10,000 shares on the market to raise $100 million. The company said in its filings that it was looking for companies worth between $500 million and $1 billion that could operate in areas such as satellites, space exploration and space tourism, among others.
In the past, the SPAC approach has provided rapid access to public markets compared to traditional or operational IPOs, and it also requires less disclosure from the merging companies.
At the height of their popularity in 2021, SPACs represented about 60% of all 1,000+ IPOs filed that year and around 50% of the 286 million raised, according to Nasdaq data. This number fell to 31 SPAC IPOs in 2022 and continued on a downward trend.
“The SPAC frenzy that we saw in 2020 and 2021 has effectively just disappeared at this point,” said Avery Marquez, assistant portfolio manager at Renaissance Capital.
Marquez prepared Renaissance’s review of the IPO market in the first quarter of 2024, which showed that just six SPAC IPO filings were raised, raising $614 million. For comparison, the 30 operational IPOs filed in the first quarter raised $7.8 billion.
“We’re back to where SPACs were before (the pandemic), where the companies that choose to go public via SPAC are largely very small, maybe not really IPO quality, and SPACs are sort of the only option they have. public.”
One SPAC that has made a splash is Donald Trump’s social media platform, Truth Social. March 22Trump Media & Technology Group merged with blank check company Digital World Acquisition Corp and, four days later, had its first day of trading on Nasdaq under the symbol DJT.
The first day of trading was a success with prices rising as high as $79. However, when the company revealed that Trump Media had $58 million in losses in 2023, the stock began to fall, trading below $30 per share on April 12.
