VinFast Auto soars 400% after listing via SPAC merger earlier this month solitary highlight Blank check transaction completed in August.
With the exception of the Vietnamese electric car maker, investors who held shares in the newly listed company through partnerships with special purpose acquisition companies have mostly only suffered losses.
A total of 11 companies have completed mergers with SPACs this month, the most activity since February, according to SPAC Research data analyzed by Bloomberg. Nine of the stocks traded below the $10 mark when the SPAC went public, with a median share price down 41% since listing as investors dumped companies with low liquidity.
SPACs allow investors to redeem their shares at $10 plus interest when they vote on a deal to close, leaving only a fraction of the dozens available for trading. Investors redeemed an average of 91% of the shares in de-SPACs that debuted this month, according to SPAC Research data. The result was some wild swings that eventually led to serious losses.
Better Home & Finance Holding Co., which began trading on Aug. 24, was the worst-performing SPAC merger in August, sink 95%. Other laggards include ESGL Holdings Ltd. and Noco-Noco Inc., both of which are down more than 70% since their debuts. A total of 43 of the 55 companies that have gone public through SPACs this year have lost money, an average loss of 55%, according to data compiled by Bloomberg.
Since going public on Aug. 15, VinFast’s market capitalization is larger than Ford Motor Co. and General Motors Co. combined, making the electric-vehicle company bigger than the 420 companies that make up the S&P 500. Its paper value is $121 billion.
However, with only 1% of VinFast’s shares available for trading, the stock’s wild rise compared with that of another U.S.-listed company with roots in Asia, AMTD Digital Inc., which has fallen more than 99% from its peak . VinFast’s rally is starting to falter, with shares down as much as 41% on Tuesday, suggesting risky Trading low-float stocks is sufficient.
Since blank checks became a popular investing trend in early 2020, more than 15 de-SPACs have gone bankrupt, while 160 of about 400 companies are trading below $2, a plunge of more than 80% from where SPACs usually list.
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